Special Resolution for Related Party Transaction


Special Resolution for Related Party Transaction

RESOLVED THAT pursuant to the provisions of Section 188 and all other applicable provisions if any, of the Companies Act, 2013 (the Act) read with the Companies (Meetings of Board and its Powers) Rules, 2014 and subject to such approvals, consents, sanctions and permissions as may be necessary, consent of the members of the company be accorded to the Board of Directors of the company to enter into contracts and/or agreements with related parties as defined under the Act with respect to Sale, purchase or supply of goods or materials, leasing of property of any kind, availing or rendering of any services, appointment of agent for purchase or sale of goods, materials, services or property or appointment of such related party to any office or place of profit in the company, or its subsidiary or associate company or any other transactions of whatever nature with related parties with effect from ______ up to the maximum ________ per annum for the year _______ and further years as provided in the table provided in and forming part of the Explanatory statement.”

FURTHER RESOLVED THAT the Board of Directors of the company, be and is hereby authorised to determine the actual sums to be involved in the proposed transactions and the terms & conditions related thereto and all other matters arising out of or incidental to the proposed transactions and generally to do all acts deeds and things that may be necessary proper, desirable or expedient and to execute all documents, agreements and writings as may be necessary, proper, desirable or expedient to give effect to this resolution”.

Explanatory Statement

In light of provisions of Section 188(1) of the Companies Act, 2013 and rules made thereunder, the Audit committee and Board of Directors of the Company have approved the transactions along with the annual limits that your company may enter with its related parties for the financial year ________.

All disclosures prescribed to be given under the provisions of the Companies Act, 2013 and the Companies (Meetings of Board and its Powers) Rules, 2014 are provided in the table appended below for the perusal of the members.

Name of the
Related Party

Nature of

Nature of the

Maximum Expected
Value of the transactions
per annum (Rs.)

 (a) Name of the related party and Nature of Relationship:
 (b) Nature, duration of the contract and particulars of the contract or arrangement :
 (c) Any advance paid or received for the contract or arrangement, if any. Nil
(d) Manner of determining the pricing and other commercial terms both included as part of contract and not considered as part of the contract: All proposed transactions would be carried out as part of the business requirements of the Company and are ensured to be on arm’s length basis.
(e)  Whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors: All factors have been considered.
(f)  Any other information relevant or important for the Board to take a decision on the proposed transaction: Nil

Members are hereby informed that pursuant to second proviso of section 188(1) of the Companies Act, 2013, no member of the company shall vote on such ordinary resolution to approve any contract or arrangement, if such member is a related party.

A copy of the draft agreement with said related parties setting out the terms and conditions is/are available for inspection without any fee to members at the Company’s registered office during the normal business hours on working days up to the date of the AGM and will be placed on the website of the company.

Your Directors recommend the resolution for your approval.

Except ________, none of the Directors, Key Managerial Persons of the Company and their relatives is/are concerned or interested in the resolution.

Important Points To Consider :

  • The listed company shall formulate a policy on materiality of related party transactions and on dealing with related party transactions:
  • A transaction with a related party shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds 10% of the annual consolidated turnover of the listed company as per the last audited financial statements of the listed company.
  • All related party transactions shall require prior approval of the audit committee.
  • All material related party transactions shall require approval of the shareholders through resolution and the related parties shall abstain from voting on such resolutions whether the company is a related party to the particular transaction or not.

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