Hi. Need help in knowing rules related in leasing Pvt ltd company's property to one of it directors. Kindly advice
1 Replies
Jatin Bajaj
(CS)
(2930 Points)
Replied 14 March 2017
AS PER SECTION 2(76) OF THE COMPANIES ACT , DIRECTORS ARE COVERED IN DEFINATION OF RELATIVES AND ANY TRANSACTION WITH SUCH DIRECTORS WITH REGARD TO LEASE OF PROPERTY IS COVERED UNDER RELATED PARTY TRANSACTION AS PER SECTION 188 OF THE COMPANIES ACT 2013 . TRANSACTION MADE IN THE ORDINARY COURSE OF BUSINESS AND ON ARM LENGTH BASIS DOES NOT REQUIRE ANY BOARD OR SHAREHOLDER APPROVAL. BUT TRANSACTION WHICH ARE NOT IN THE ORDINARY COURSE OF BUSINESS AND NOT ON AN ARM LENGTH BASIS, THEN PRIOR BOARD RESOLUTION IS REQUIRED AND IF SUCH TRANSACTION EXCEEDS 10% OF THE TURNOVER OF THE COMPANY OR 100 CRORE RUPEES WHICH EVER IS LOWER THEN PRIOR SHAREHOLDER APPROVAL BY ORDINARY RESOLUTION IS REQUIRED.
TRANSACTION BETWEEN HOLDING AND WHOLLY OWNED SUBSIDIARY COMPANY DOES NOT REQUIRE ANY KIND OF BOARD OR ORDINARY RESOLUTION .
ENETERIES OF SUCH TRANSACTION REQUIRED TO BE ENTERED IN REGISTER MAINTAINED UNDER SECTION 189 IN MBP 4. AND ALSO DETAILS OF SUCH TRANSACTION FORMS THE PART OF BOARD REPORT WHICH IS ATTACHED AS AN ANNEXURE WITH DIRECTOR REPORT IN FORM AOC 2
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