Amendment in threshold limit of Related Party Transactions

The Ministry of Corporate Affairs (MCA) has vide Notification dated 18th November, 2019 amended the Companies (Meetings of Board and its Powers) Rules, 2014 to modify the threshold limits for related party transactions under section 188, which if crossed, will trigger prior approval of members of company.

Transaction	Old limit	Revised Limit
sale, purchase or supply of any goods or material, directly or through appointment of agent	10% or more of the turnover of the company; or rupees 100 Crore, whichever is lower	10% or more of the turnover of the company
selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent	10% or more of net worth of the company or rupees 100 crore, whichever is lower	10% or more of net worth of the company
leasing of property any kind	10%  or more of the net worth of company or  10% or more of turnover of the company or rupees 100 crore, whichever is lower	10% or more of the turnover of the company
availing or rendering of any services, directly or through appointment of agent	10% or more of the turnover of the company or rupees 50 crore, whichever is lower	10% or more of the turnover of the company

So, to summarise, in the above clauses, instead of keeping two or more threshold limits and making it subjective to a certain amount, MCA has now tried to simplify these threshold limits. This amendment is effective immediately from the date of notification of this amendment, i.e., from 18th November 2019.