Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Process of M&A Transactions

Veda Industries Ltd, an unlisted company, proposes to buy a factory from a firm in which its director is a partner. The Board has not yet met. Under the provisions on related party transactions, what is the minimum step required before entering into this arrangement, apart from any prescribed threshold approval?

The company must first obtain the consent of its Board of Directors through a resolution passed at a Board meeting, because buying property from a related party falls under section 188(1). Registrar, auditor or Tribunal approval is not the required step.

  1. AConsent of the Board of Directors given by a resolution at a meeting of the BoardCorrect
  2. BApproval of the Registrar of Companies
  3. CWritten consent of the statutory auditor
  4. DApproval of the National Company Law Tribunal

Explanation

Section 188(1) requires the consent of the Board by a resolution at a meeting for contracts with related parties, including buying property. The other bodies listed have no role in this approval. Shareholder approval arises only if prescribed thresholds are crossed.

Did you get it right without looking?

One question tells you little. A timed set on Process of M&A Transactions shows your real accuracy, how long you take and where you lose marks.

Practise Process of M&A TransactionsFree diagnostic mock

More Process of M&A Transactions questions