MCA vide notification dated 14th August 2014 has amended the Companies (Meetings of Board and its Powers) Rules, 2014 through Companies (Meetings of Board and its Powers) Second amendment Rules, 2014 and the text of following amendment is reproduced as below:-

With this amendment it shall be read as:-

The text of rule with this amendment shall be read as:-

“3(6) 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, (omitted)” shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting be deemed to be made at such place “.

The text of rule with this amendment shall be read as:-
            The following matters shall not be dealt with in any meeting held through video conferencing or other audio visual means.-

The text of rule with this amendment shall be read as:-

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 company shall not enter into a transaction or transactions, where the transaction or transactions to be entered into,

1. In rule 3, in sub-rule (6), the words and commas “, which shall be in India,” shall be omitted.
2. In rule 4, in sub-rule (1), for the brackets, figure and word “(1] The”, the word “The” shall be substituted and in clause (iv), for the words “consideration of accounts”, the words “consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act“ shall be substituted.
   1. the approval of the annual financial statements;
   2. the approval of the Board’s report;
   3. the approval of the prospectus;
   4. the Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act; ( earlier it was only consideration of accounts); and
   5. the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
3.  In rule 15, for sub-rule (3), the following sub-rule shall be substituted, namely :-
   • (a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section 188, with criteria as mentioned below –

     Earlier Text of (i) read as: – 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;

     Earlier Text of (ii) read as: 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;

     Earlier Text of (iii) read as: 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;

     Earlier Text of (iv) read as: 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;

     1. Sale, purchase or supply of any goods or materials, directly or through appointment of agent, exceeding ten per cent. of the turnover of the company or rupees one hundred crore, whichever is lower, as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188;
     2. Selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, exceeding ten per cent. of net worth of the company or rupees one hundred crore, whichever is lower, as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;
     3.  Leasing of property of any kind exceeding ten per cent. of the net worth of the company or ten per cent. of turnover of the company or rupees one hundred crore, whichever is lower, as mentioned in clause (c) of sub-section(1) of section 188;
     4.  Availing or rendering of any services, directly or through appointment of agent, exceeding ten per cent. of the turnover of the company or rupees fifty crore, whichever is lower, as mentioned in clause (d) and clause (e) respectively of sub-section (1) of section 188:

     Explanation. – It is hereby clarified that the limits specified in sub-clauses (i) to (iv) shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

     (b) is for 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) is for remuneration for underwriting the subscription of any securities or derivatives thereof, of the company exceeding one per cent. 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 computed on the  basis of the Audited Financial Statement of the preceding Financial Year.
2. In case of a wholly owned subsidiary, the special resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and the holding company.
   1. The explanatory statement to be annexed to the notice of a general meeting convened pursuant to section 101 shall contain the following particulars namely: –
   2. name of the related party ;
   3. name of the directors or key managerial personnel who is related, if any;
   4. nature of relationship;
   5. nature, material terms, monetary value and particulars of the contract or arrangement;
   6. any other information relevant or important for the members to take a decision on the proposed resolutions.

Please take note that by way of this amendment, the Central Government has deleted the requirement of taking the approval of shareholders by way of special resolution for related party transactions, where the paid-up capital of the company is Rs 10 crore or more. Now approval is required in case the aforesaid transactions meets the criteria prescribed therein, irrespective of their paid-up capital.