Check if your company proposes to enter into an arrangement with any of the following persons for acquisition, from the company from any of the person below mentioned or acquisition by the company from any of the person below mentioned, of assets for consideration other than cash :
(a) company director
(b) associate, subsidiary or holding of the company director
(c) any person connected with a or b above
If your company is required to constitute an audit committee as provided in section 177 of the act 3013 with rule 6 of the companies, then seek approval of the audit committee to the transaction.
Initial support to such arrangement by the shareholders will also be needed. In case the transaction is with a director of the holding company then prior approval of the shareholders of the holding company will also required.
Convene a meeting of the shareholders and in case of listed companies provision of remote e-voting needs to be provided.
The holding company shall contain particulars of the arrangement on with value of the assets involved. Valuation of the assets calculated by a registered valuer is necessary to be undertaken.
Approval of the shareholders may be way of an ordinary resolution. In case of an unlisted company related parties to the transaction.
In case of a listed company, as per the listing agreement, a related party shall not be entitled to vote at such a resolution. In case of a listed entity the approval earlier was by way of a special resolution but now only an ordinary resolution is necessary to be passed.
Make necessary entries in the company register to be kept for this purpose in accordance with section 189 of the 2013 act.
If a contract or arrangement with a related party is entered into without the approval of the shareholders then the arrangement shall be voidable at the instance of the company. Unless such avoidance is not possible due to facts of the case. The company has been identified for the loss or damage caused to it or where any rights are acquired by a bona-fide for value without notice of this provision by any other person.
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