The Ministry of Corporate Affairs vide its notification dated 3rd March 2020 has amended certain provisions in its earlier notification dated 5th June 2015 thereby exempting government companies from Related party transaction requirements.
The Amendment brings in new explanation to the term paid-up share capital under the definition for Government company in which the paid-up share capital shall be construed as “total voting power”, where shares with differential voting rights have been issued.
Further, no company shall enter into any contract or arrangement with a related party with respect to sale, purchase or supply of any goods or material, leasing of property of any kind, etc without the consent of the Board of Directors and it shall not be applicable to Government company in respect of contracts or arrangements entered into by it with any other Government company, or with Central Government or any State Government or any combination thereof.
It shall not apply to Government company, other than a listed company, in respect of contracts or arrangements other than those referred to in clause (a), in case such company obtains approval of the Ministry or Department of the Central Government which is administratively in charge of the company, or, as the case may be, the State Government before entering into such contract or arrangement.
Click here to read the Notification.
