Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015

Government of India
Ministry of Corporate Affairs

New Delhi, the 14th December, 2015

G.S.R.-(E).- In exercise of the powers conferred under sections 173, 175, 177,178, 179, 184, 185, 186, 187, 188, 189 and section 191 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Meetings of Board and its Powers) Rules,2014, namely:-

  1. (1) These rules may be called the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.

  1. In the Companies (Meetings of Board and its Powers) Rules, 2014,-

(i) After rule 6, the following rule shall be inserted, namely:-

“6A. Omnibus approval for related party transactions on annual basis.- All related party transactions shall require approval of the Audit Committee and the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to the following conditions, namely:-

(1)The Audit Committee shall, after obtaining approval of the Board of Directors, specify the criteria for making the omnibus approval which shall include the following, namely:-

(a) maximum value of the transactions, in aggregate, which can be allowed under the omnibus route in a year;

(b) The maximum value per transaction which can be allowed;

(c) Extent and manner of disclosures to be made to the Audit Committee at the time of seeking omnibus approval;

(d) Review, at such intervals as the Audit Committee may deem fit, related party transaction entered into by the company pursuant to each of the omnibus approval made;

(e) Transactions which cannot be subject to the omnibus approval by the Audit Committee.

(2) The Audit Committee shall consider the following factors while specifying the criteria for making omnibus approval, namely: –

(a) repetitiveness of the transactions (in past or in future);

(b) justification for the need of omnibus approval.

(3) The Audit Committee shall satisfy itself on the need for omnibus approval for transactions of repetitive nature and that such approval is in the interest of the company.

(4) The omnibus approval shall contain or indicate the following: –

(a) name of the related parties;

(b) nature and duration of the transaction;

(c) maximum amount of transaction that can be entered into;

(d) the indicative base price or current contracted price and the formula for variation in the price, if any; and

(e) any other information relevant or important for the Audit Committee to take a decision on the proposed transaction:

Provided that where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may make omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

(5) Omnibus approval shall be valid for a period not exceeding one financial year and shall require fresh approval after the expiry of such financial year.

(6) Omnibus approval shall not be made for transactions in respect of selling or disposing of the undertaking of the company.

(7) Any other conditions as the Audit Committee may deem fit.”.

(ii) Rule 10 shall be omitted;

(iii) In rule 15, in sub-rule (3), for the words “special resolution”, wherever they occur, the word “resolution” shall be substituted.

[F. No. 1/32/2013-Cl-V-Part]

Amardeep Singh Bhatia
Joint Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 240(E), dated 31st March, 2014 and was subsequently amended vide notification number G.S.R. 398(E), dated the 12th June, 2014, number G.S.R. 59O(E), dated the 14th August, 2014 and number G.S.R 206(E), dated the 18th March, 2015.

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