'No company shall enter into any contract or arrangement with a related party.' Examine the validity of the statement.

"No company shall enter into any contract or arrangement with a related party"- The statement is not valid . A company may enter into any contract or arrangement with a related party subject to section 188. The section provides for approval from the Board/ members for various contracts or arrangements with a related party with respect to - sale, purchase or supply of any goods or materials; selling or otherwise disposing of, or buying, property of any kind; leasing of property of any kind; availing or rendering of any services; appointment of any agent for purchase or sale of goods, materials, services or property; such related party's appointment to any office or place of profit in the company; and its subsidiary company or associate company; and underwriting the subscription of any securities or derivatives thereof, of the company. The first proviso read with Rule 15 of the companies (Meetings of Board and its Powers) Rules, 2014 further provides for a resolution in a general meeting where the transaction amount exceeds certain limits. Approval in General meeting is not required in case the transactions are entered into by the company in its ordinary course of business which are on an arm's length basis. The term 'Related Party' is defined under section 2(76) of the Companies Act, 2013. * The resolution contemplated by the first proviso was a special resolution but w.e.f May 2015 it is ordinary resolution. The requirement of Board resolution is not applicable for transactions in between Holding and its wholly owned subsidiary. Student who gives the updated answer may be given marks.