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Board Resolution for Approval of Related Party Transactions
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors of the Company
________________
CIN: ________________
Registered Office: ________________
Date of Meeting: __________
Time: ______ (Hours)
Venue: Registered Office of the Company at ________________
SUBJECT: APPROVAL OF RELATED PARTY TRANSACTION
Details of the Related Party Transaction:
Name of the Related Party: ________________
Nature of Relationship: ________________
Nature of Transaction: ________________
Value of Transaction: Rs. ________________ (Rupees ________________ only)
"RESOLVED THAT pursuant to the provisions of Section 188 and other applicable provisions of the Companies Act, 2013 read with Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014, and the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (if applicable), and subject to such other approvals as may be required, the consent of the Board of Directors be and is hereby accorded to enter into the following transaction with ________________, being a related party within the meaning of Section 2(76) of the Companies Act, 2013:
Nature of Transaction: ________________
Maximum Value: Rs. ________________ (Rupees ________________ only)
Duration/Period: ________________
"RESOLVED FURTHER THAT the Board hereby confirms that the aforesaid transaction is at arm's length and in the ordinary course of business of the Company."
"RESOLVED FURTHER THAT ________________, ________________ of the Company, be and is hereby authorised to execute all necessary agreements, documents, and instruments, and to do all such acts, deeds, matters, and things as may be necessary, proper, or expedient to give effect to the aforesaid resolution."
"RESOLVED FURTHER THAT the particulars of this related party transaction shall be entered in the Register of Contracts maintained under Section 189 of the Companies Act, 2013, and disclosed in the Board's Report as required under the applicable provisions of law."
Note: The following Director(s), being interested in the above transaction, abstained from voting on this resolution: ________________
For ________________
Signature: _________________________
Name:
Designation:
DIN:
Date:
Place:
Board Resolution for Approval of Related Party Transactions
Professional Format Guide for Indian Companies
Introduction
A Board Resolution for Approval of Related Party Transactions is a formal corporate document that records the decision of the Board of Directors to authorise transactions between the company and its related parties. Under the Companies Act, 2013, related party transactions require prior approval from the Board of Directors to ensure transparency, prevent conflicts of interest, and protect the interests of the company and its stakeholders. Related parties typically include directors, key managerial personnel, their relatives, and entities in which they hold significant influence.
This resolution is essential for maintaining corporate governance standards and ensuring compliance with statutory disclosure requirements. Companies are required to document all related party transactions and, in certain cases, obtain prior approval from the Audit Committee or shareholders. Directors, company secretaries, compliance officers, and auditors regularly require this document for statutory filings, audit documentation, and regulatory compliance purposes.
Benefits of Using a Standard Format
Adopting a professionally structured board resolution format ensures that all essential elements required under the Companies Act are accurately captured. A standardised template reduces the risk of procedural errors, expedites the documentation process, and facilitates seamless compliance with audit and regulatory requirements. This approach supports transparency in corporate dealings and maintains proper records for statutory filings.
Relevance to Corporate Compliance
Related party transactions have significant implications for financial reporting and statutory compliance. Companies must maintain detailed records of all such transactions, which are subject to disclosure in the annual financial statements and Directors' Report. Where the company is registered under GST, transactions with related parties may also have implications for GST valuation rules, requiring careful documentation.
Proper board resolutions help establish an audit trail and demonstrate compliance with corporate governance norms during regulatory reviews and statutory audits.
Board Resolution for Approval of Related Party Transactions - Sample Format
Company Name: _______________________________________
CIN: _______________________________________
Registered Office Address: _______________________________________
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors held on ________ (Date) at ________ (Time) at the Registered Office of the Company at ________ (Address)
SUBJECT: APPROVAL OF RELATED PARTY TRANSACTION
Details of the Related Party Transaction:
Name of the Related Party: _______________________________________
Nature of Relationship: _______________________________________
Nature of Transaction: _______________________________________
Value of Transaction: Rs. _______________________________________
(Rupees _______________________________________ only)
"RESOLVED THAT pursuant to the provisions of Section 188 and other applicable provisions of the Companies Act, 2013 read with Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014, and the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (if applicable), and subject to such other approvals as may be required, the consent of the Board of Directors be and is hereby accorded to enter into the following transaction with _______________________________________ (Name of Related Party), being a related party within the meaning of Section 2(76) of the Companies Act, 2013:
Nature of Transaction: _______________________________________
Maximum Value: Rs. _______________________________________ (Rupees _______________________________________ only)
Duration/Period: _______________________________________
"RESOLVED FURTHER THAT the Board hereby confirms that the aforesaid transaction is at arm's length and in the ordinary course of business of the Company."
"RESOLVED FURTHER THAT _______________________________________ (Name of Authorised Person), _______________________________________ (Designation) of the Company, be and is hereby authorised to execute all necessary agreements, documents, and instruments, and to do all such acts, deeds, matters, and things as may be necessary, proper, or expedient to give effect to the aforesaid resolution."
"RESOLVED FURTHER THAT the particulars of this related party transaction shall be entered in the Register of Contracts maintained under Section 189 of the Companies Act, 2013, and disclosed in the Board's Report as required under the applicable provisions of law."
Note: The following Director(s), being interested in the above transaction, abstained from voting on this resolution: _______________________________________
For _________________________________ (Company Name)
Signature: _______________________________________
Name: _______________________________________
Designation: _______________________________________
DIN: _______________________________________
Date: _______________________________________
Place: _______________________________________
Frequently Asked Questions
1. Is the signature of all directors mandatory on the board resolution for approval of related party transactions?
No, the signatures of all directors are not mandatory on the board resolution for approval of related party transactions. The resolution should be signed by an authorised signatory, typically the Chairperson of the meeting or a director authorised by the Board. However, directors who have an interest in the transaction must abstain from voting, and this should be recorded in the minutes.
2. Does the board resolution for approval of related party transactions need to be certified by a professional?
Professional certification may be required when filing certain forms with the Registrar of Companies or when the resolution is used for external purposes such as banking or contractual documentation. A practising Company Secretary, Chartered Accountant, or Cost Accountant may be required to certify the resolution depending on the specific regulatory or institutional requirements. It is advisable to consult with a qualified professional for your specific use case.
3. Is the board resolution for approval of related party transactions to be on company letterhead?
While there is no strict statutory requirement mandating the use of company letterhead, it is considered best practice for authenticity and professional presentation. Using official letterhead lends credibility to the document and facilitates verification by auditors, regulatory authorities, and third parties such as banks or contracting parties who may require the resolution for their records.
4. Who can be considered as an authorised signatory for the board resolution for approval of related party transactions?
An authorised signatory for the board resolution is typically the Chairperson of the board meeting or any director expressly authorised by the Board to sign the certified true copy. The Company Secretary, if appointed, may also sign the resolution. The authorised signatory should possess a valid Director Identification Number (DIN) if they are a director, and their credentials should be clearly mentioned in the signature block.
5. Which resolution is required for the board resolution for approval of related party transactions?
For most related party transactions that are in the ordinary course of business and at arm's length, a board resolution passed by a simple majority of disinterested directors is sufficient. However, certain material transactions or those not in the ordinary course of business may require approval by way of an ordinary resolution from shareholders. Listed companies have additional requirements under SEBI regulations, which may mandate shareholder approval for transactions exceeding specified thresholds.