Legislation UpdatesRules & Regulations

The Food Safety and Standards Authority of India notified the Food Safety and Standards (Vegan Foods) Regulations, 2021 vide its notification dated September 6, 2021.


Key points of the Regulations are as follows:


  • Vegan Foods: Those foods or food ingredients that do not constitute any ingredients, additives and processing aids of animal origin including milk and milk products, fish, poultry and meat, egg or egg products, honey or honey bee products, materials of insect origin like silk, dyes etc or ingredients that are clarified using animal sourced products e.g., bone char used in sugar bleaching, is in glass in clarifying beer etc.
  • General Requirements: Vegan Foods shall not have undergone animal testing for evaluating the safety of the final product or ingredient and shall not comprise any animal derived GMOs or products prepared using animal derived gene for manufacturing the ingredients or products.
  • Compliance: The Food Business Operator shall submit an application with all necessary details related to plant or machinery or premises to the Authority. Inspection and verification of the premises shall be done by concerned Food Safety Officer or Designated Officer. The Food Authority may specify guidelines for endorsement of vegan logo and annual market surveillance for such products. The concerned registration or licensing authority shall carry out surveillance of the registered establishment at least once a year.
  • Labelling and Display Requirements: All vegan foods shall comply with the packaging and labelling requirements specified under the Food Safety and Standards (Labelling and Display) Regulations, 2020. Also, the seller of vegan food either exclusively or as part of retail merchandise shall store and display such food distinguishable from non-vegan food.


*Tanvi Singh, Editorial Assistant has reported this brief.

OP. ED.Practical Lawyer Archives

The provision relating to “related party transactions” have been incorporated for the first time in the Indian Company Law. The provisions are prescribed in Section 188 of the Companies Act, 2013 (Act). Under the Companies Act, 1956, there was no explicit provision as “related party transaction”, however, it can be said that Section 297 of the Companies Act, 1956 slightly corresponds to Section 188 of the Act. The scope and nature of transactions, number of related parties involved, compliances and disclosure requirements contemplated have significantly been enhanced under the provisions of Section 188 of the Act.

This article is a compilation and analysis of the relevant provisions relating to related party transactions. The article also contains the checklist on ensuring compliance of relevant provisions relating to related party transactions.

Following is the basic checklist for identifying the applicability of Section 188 of the Act:

(1) Transactions with company— It is necessary that a company is a party to the said transactions. The company can either provide or avail the necessary services or the company can sell or purchase or supply of any goods or materials.

(2) Identification of prescribed transaction— It is necessary that the company enters into a prescribed transaction [as provided in sub-section (1) of Section 188 of the Act], which includes: (i) sale, purchase or supply of any goods or materials; (ii) selling or otherwise disposing of, or buying, property of any kind; (iii) leasing of property of any kind; (iv) availing or rendering of any services; (v) appointment of any agent for purchase or sale of goods, materials, services  or property; (vi) such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and (vii) underwriting the subscription of any securities or derivatives thereof, of the company.

(3) Identification of prescribed “related party”— It is necessary that the company enters into a prescribed transaction with a “related party” [as provided in sub-section (76) of Section 2 of the Act]. Some of the related parties are: director, relative of director, key managerial personnel, relative of key managerial personnel, firm in which director or director’s relative is a partner, private company or public company in which director or manager is interested [as prescribed in Section 2(76) of the Act], subsidiary company, holding company, associate company, investing company, venturer company (as defined).

If all the three conditions are satisfied, then it is necessary to proceed with the approvals, compliances and disclosures under the provisions of Section 188 of the Act. The checklist for the identified related party transactions is as follows:

(1) Approval of Audit Committee (under Section 177 of the Act)— The Audit Committee shall approve the related party transactions or approve any modification to the related party transactions. The Audit Committee can also give an omnibus approval to certain related party transactions. The Committee shall consider two factors while specifying the criteria for making omnibus approval, namely, (i) repetitiveness of the transactions (in part or in future); and (ii) justification for the need of omnibus approval. Such omnibus approval for the related party transactions shall be obtained on annual basis [Rule 6-A of the Companies (Meetings of Board and its Powers) Rules, 2014]. Such omnibus approval shall be valid for a period not exceeding 1 financial year and shall require fresh approval after expiry of such financial year. Omnibus approval shall not be made for transactions in respect of selling or disposing of the undertaking of the company.

(2) Approval of the Board of Directors (under Section 188 of the Act)— The Board of Directors shall give consent to the related party transactions at its meeting only. Such meeting can be held in person or through video conferencing or other audio-visual means as may be prescribed. Such consent of the Board of Directors cannot be obtained by passing a circular resolution or by any other mode (as prescribed in Section 175 of the Act). Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014 provides for the requisite disclosures to the Board of Directors in agenda of the meeting at which the resolution is proposed to be moved. The director interested in any contract or arrangement shall not be present at the meeting during discussion on such subject- matter of the resolution relating to such contract or arrangement.

(3) Approval of the shareholders (under Section 188 of the Act)— Prior approval of the shareholders by ordinary resolution shall be required if the company is entering into a contract or arrangement with a related party if the transaction(s) exceeds the prescribed limits [i.e. as prescribed in Rule 15(3) of the Companies (Meetings of Board and its Powers) Rules, 2014]. The said rule has prescribed monetary threshold for each type of prescribed transaction. The limits specified shall apply for transaction(s) to be entered into either individually or taken together with the previous transactions during a financial year. The said rule provides for the disclosures in the explanatory statement to be annexed to the notice of general meeting. Following are some important points relating to approval of shareholders:

  (i) Member of the company shall not vote on the ordinary resolution approving related party transaction if such member is a related party (this provision is not applicable to private companies. MCA Notification dated 5-6-2015).

  (ii) Approval of the shareholder is not applicable in the cases where 90% or more members (in number) are the relatives of promoters or are related parties (applicable to private company and public company, both).

  (iii) In case of wholly-owned subsidiary company, the ordinary resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between the wholly-owned subsidiary company and the holding company, subject to the condition that the accounts of the subsidiary company are consolidated with holding company and placed before shareholders at the general meeting for its approval.

  (iv) Certain exemptions are applicable to government company (MCA Notification dated 5-6-2015).

(4)Exemption from the compliances of Section 188 of the Act— Consent of the Board of Directors and prior approval of the shareholders is not required when such related party transaction is in the ordinary course of its business and on arm’s length basis. The Act has not defined “ordinary course of its business”. For this purpose the Board of Directors is required to exercise their judgment. However, the Act has defined transaction on arm’s length basis. It means a transaction between two related parties that is conducted as if they were unrelated so that there is no conflict of interest. There is no exemption for obtaining the approval of the Audit Committee.

(5)Disclosures in Board’s report— Every contract or arrangement entered into by the company shall be referred to in the Board’s report to the shareholders along with the justification for entering into such contract or arrangement [Section 188(2) of the Act]. Pursuant to Section 134(3) of the Act, the Board’s report shall include particulars of contracts or arrangements with related parties in prescribed form (Form AOC-2).

(6)Register of contracts or arrangements in which directors are interested— According to Section 189 of the Act, the company shall maintain a register (Form MBP-4) for related party transactions. After entering the particulars in the register, such register shall be placed before the next Board meeting and signed by all directors present at the meeting. The entries in the register shall be made at once, whenever there is a cause to make entry, in chronological order and shall be authenticated by the Company Secretary of the company or by any other person authorised by the Board for the purpose. Such register shall be kept at the registered office of the company. The register shall be preserved permanently and shall be kept in the custody of the Company Secretary of the company or any other person authorised by the Board for the purpose.

(7)Other important checkpoints— Section 188 (3) of the Act provides for ratification of the related party transaction entered into by a director or any other employee without consent of the Board of Director or approval of shareholders in general meeting. Ministry of Corporate Affairs (by its Circular dated 17-7-2014) has exempted companies from the compliance of Section 188 of the Act, arising out of compromises, arrangements and amalgamations dealt under the specific provisions of the Companies Act.

The provisions relating to related party transactions are one of the most amended provisions under the Act. In my view, “related party transactions” is one of the critical tests of corporate governance. The above checklist relates to related party transactions by private companies or unlisted public companies. In case of listed companies, the provisions of Section 188 of the Act and Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, both shall be complied with.

* Gaurav N Pingle, Practising Company Secretary, Pune. He can be reached at gp@csgauravpingle.com.

Case BriefsHigh Courts

Delhi High Court: A Division Bench comprising of Vipin Sanghi and I.S. Mehta, JJ. took notice of the status report filed by the Delhi Police in compliance of the previous order of the High Court.

In the report, Delhi Police disclosed that from 1 July 2017 to 30 June 2018, a total of 2,38,070 cases were registered and approximately 10 lakh witnesses were examined. It submitted that since IT is dynamic and existing technology becomes obsolete very soon, the storage device which is used now may not be operable while recording evidence before the Court and it may not be possible to retrieve the data at relevant time. Also, to successfully store and retrieve such data, an information retrieval system with huge capacity will have to be set up which require involvement of experts and might include issues of data security, hacking, ownership of clouds, etc.

The High Court considered the issues raised in the report and was of the view that with involvement of experts in the field, the said issues can be satisfactorily taken care of. The Court made following observations:

  • The recording of statements of witnesses and disclosure statements may be recorded by a body-wearable camera.
  • Digital recording of the proceedings under Section 161 CrPC will lend immense credibility to performance of the police.
  • Storing data in digital media will take far lesser space than manual records.
  • It is for the State to arrange the funds — either Government of NCT of Delhi or the Central Government — for installation of such technology.
  • The issues related to finance should not deter the State to implement the use of such technology in larger public interest and to preserve and advance the rule of law.

The Court issued notice regarding the same to the Commissioner, Delhi Police; Home Secretary, Delhi Government; and Secretary, Ministry of Home Affairs, Union of India. The matter is further listed on 10 September 2018. [Ramesh Kumar v. State (NCT of Delhi), Crl.  A. No. 395 of 2000, dated 20-08-2018]