Companies (meetings of board and its Powers) Rules – Amendment

Amendment to Companies (Meetings of Board and its Powers) Rules, 2014 – Clarification on “Business of Financing Industrial Enterprises”

1. Purpose of the Notification

The Central Government has amended the Companies (Meetings of Board and its Powers) Rules, 2014 using its authority under the Companies Act, 2013 — specifically sections 173, 177, 178, 186, and 469.

2. Effective Date

The amendment will take effect from the date it is published in the Official Gazette (i.e., it becomes law once officially notified).

3. Key Amendment – Rule 11(2) Substituted

The amendment replaces sub-rule (2) of Rule 11 in the 2014 Rules.
This rule relates to “Loans and Investments by Companies” under Section 186 of the Companies Act, 2013.

4. What Has Changed

The new sub-rule clarifies what is meant by the term
“business of financing industrial enterprises” for the purpose of Section 186(11)(a) of the Act.

Earlier, this term was not clearly defined — this amendment now specifies it separately for two types of financial entities:

(i) For NBFCs (Non-Banking Financial Companies) registered with the RBI:

It includes:

Giving loans or providing guarantees or securities for repayment of any loan — in the ordinary course of business.

✅ Effect: NBFCs engaged in normal lending or guarantee activities will continue to be exempt from restrictions under Section 186, as they are doing this as part of their regular business.

(ii) For Finance Companies registered with the IFSCA (International Financial Services Centres Authority):

It includes:

Activities mentioned in sub-clause (a) or (e) of clause (ii) of sub-regulation (1) of regulation 5 of the IFSCA (Finance Company) Regulations, 2021, in the ordinary course of their business.

✅ Effect: Finance companies operating in GIFT City or other IFSCs will also be treated similarly for exemption under Section 186 when conducting these defined financial activities.

5. Why This Amendment Matters

This amendment:

• Clarifies which entities qualify under the “business of financing industrial enterprises.”
• Aligns Company Law with RBI and IFSCA frameworks.
• Ensures that genuine financial institutions (like NBFCs and IFSC finance companies) are not burdened by the restrictions of Section 186, which generally limit inter-corporate loans and investments.

6. Summary

Notification

Also Read: MCA Update on New Company Forms (Effective 14th July 2025)

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