RCL, a government company has entered into a contract with BVCL, another government company for supply of chemicals and fertilizers. The 4 directors of RCL are also directors on the Board of BVCL. Whether RCL and BVCL ar

The Ministry of Corporate Affairs (MCA) under Section 462 of the Companies Act, 2013 vide notification no: G.S.R. 151 (E), dated 02 nd March, 2020, has exempted the Government Companies with respect to the related party transactions. First and Second proviso to sub-section (1) of section 188 shall not apply to - Government company in respect of contracts or arrangements entered into by it with any other Government company, or with Central Government or any State Government or any combination thereof; Government company, other than a listed company, in respect of contracts or arrangements other than those referred to in clause (a), in case such company obtains approval of the Ministry or Department of the Central Government which is administratively in charge of the company, or, as the case may be, the State Government before entering into such contract or arrangement. Before this amendment the contracts or arrangements with any other Government Company was only exempted, with this amendment the exemption is also extended to the contracts or arrangements with the Central Government or any State Government or any combination thereof. In view of the above, as the contract is between two Government Companies, RCL and BVCL are not required to comply with the provisions of Related Party Transaction under section 188 of the Companies Act, 2013.