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Companies (Meetings of Board and its powers) Second Amendment Rules, 2014

The Ministry of Corporate Affairs has issued a notification with respect to the Companies (Meetings of Board and its powers) Second Amendment Rules, 2014 dated 14.08.2014 bringing out clarification for various issues which have caused a sense of dilemma to all the stakeholders.

The amendments are contained herein below:

In Rule 3 sub – rule (6) which contains the provisions w.r.t to the meetings of board through video conferencing and says that ; With respect to every meeting conducted through video conferencing or other audio visual means authorised under these rules, the scheduled venue of the meeting as set forth in the notice convening the meeting, which shall be in India, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place.

The words “which shall be in India ” shall be omitted.

In rule 4 which contains the items which shall not be dealt in the meetings of the Board held through video conferencing of which clause (iv) the which says that the Audit Committee meetings for the consideration of annual accounts; the word consideration of annual accounts shall be substituted and in place there of the following statement shall be contained which shall be as under:

“the consideration of annual financial statements including the consolidated financial statements if any to be approved by the Board under section 134(1) of the Act.

In Rule 15 sub-rule 3, the said sub rule shall be substituted with which shall be as under, thereby clause (i) and (ii) shall be omitted from the following sub-rule.

(3) For the purposes of first proviso to sub-section (1) of section 188, except with the prior approval of the company by a special resolution­.

(a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section 188 with criteria, as mentioned below ­
(i) sale, purchase or supply of any goods or materials directly or through appointment of agents exceeding twenty five percent. of the annual turnover as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188;
(ii) selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agents exceeding ten percent. of net worth as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;
(iii) leasing of property of any kind exceeding ten percent. of the net worth or exceeding ten percent. of turnover as mentioned in clause (c) of sub-section (1) of section 188;
(iv) availing or rendering of any services directly or through appointment of agents exceeding ten percent. of the net worth as mentioned in clause (d) and clause (e) of sub-section (1) of section 188;

(b) appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding two and half lakh rupees as mentioned in clause (f) of sub-section (1) of section 188; or

(c) remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding one percent. of the net worth as mentioned in clause (g) of sub-section (1) of section 188.

Explanation.- 
(1) The Turnover or Net Worth referred in the above sub-rules shall be on the basis of the Audited Financial Statement of the preceding Financial year.
(2) In case of wholly owned subsidiary, the special resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between wholly owned subsidiary and holding company.
(3) The explanatory statement to be annexed to the notice of a general meeting convened pursuant to section 101 shall contain the following particulars namely:­

(a) name of the related party ;
(b) name of the director or key managerial personnel who is related, if any;
(c) nature of relationship;
(d) nature, material terms, monetary value and particulars of the contract or arrangement;
(e) any other information relevant or important for the members to take a decision on the proposed resolution.

The Notification containing the following details can be accessed below:

Companies (Meetings of Board and its powers) Second Amendment Rules,2014

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