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

MCA vide Notification No. GSR 971(E) on Monday, 14th December, 2015 amended the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015

I. Inserted  Rule 6A after Rule 6:

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.

The said Amendment Rules shall be effective from 14th December, 2015. The Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015 can be accessed at the following link: MCA_ Notification No. 971(E)_Companies (Meetings of Board & its Powers) 2nd Amendment Rules, 2015

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