Investment in Associated Company and Related Party Transactions


Equity Investments – Compliance Requirements

Approval by shareholders via special resolution

Section 199 of the Companies Act, 2017 puts some restrictions on investment in associated companies and undertakings.  It requires that when an investment is made, it should have prior approval of shareholders via a special resolution.  For certain specified categories of companies, passing of special resolution is however, not required.

Disclosure to shareholders in statement annexed to special resolution

As per sub-section (1) of Section 199, the special resolution should indicate nature, period of investment, amount, and its terms and conditions.

As per regulations of 2017 called Companies (Investment in Associated Uompanies or Associated Undertakings) Regulations, 2017, the statement annexed with the notice of special resolution sent to the members with the notice of AGM / EOGM, the company shall disclose various information in the statement annexed to the notice, pursuant to sub-section (3) of section 134 of the Act, of a general meeting called for considering investment decision under section 199 of the Act.

Click here to view these disclosures.