Government clarifies ‘related party’ deal norms in new Companies Act

The government issued a clarification diluting provisions over related-party transactions in new Companies Act, and excluded amalgamations and mergers from scope of this rule. The new rule states only “related party” who has interest in a particular transaction would not have a vote to make a decision. The earlier provision under Section 188 of the Act precluded “all related parties” in a company from voting on any transaction with “any related party”, even though they had no stake in the transaction.


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