Related Party under Companies Act 2013.
|Si. No||Related parties||Examples|
A director or his relative (Relative means a member of the same HUF, husband, wife, father, step father, mother, step mother, son, step son, son’s wife, daughter, daughter’s husband, brother, step brother, sister, step sister)
Mr L, Mr M and Mr N are directors and the relatives of these Directors are considered as related parties.
Key managerial personnel or his relative
Say, Mr O is a Company secretary,his relatives will be considered related parties.
A firm in which a director, manager, or relative is a partner
Mr L is a partner at RST. Pvt. Ltd, another firm. This firm will also be considered as a related party.
A private company in which a director, manager, or relative is a member or director
Mr. M is a director in M Pvt Ltd – In this case M Pvt. ltd becomes a related party.Even when Mr. M’s relative is a member or director in M Pvt ltd, this company will be considered as a related party.
A public company in which a director or manager is a director and holds along with his relatives more than 2% of its paid-up capital
Mr. N along with his relatives holds more than 2% of the paid-up capital of N ltd. In this case, N Ltd will be considered as a related party.
Any body corporate whose board of directors, MD or manager is required to act in accordance with the advice, directions or instructions of a director or manager (NA in cases when these directions are followed in professional capacity)
When P Ltd acts on the directions of Mr. L, P Ltd will be a related party.
Any person on whose advice, directions or instructions a director or manager is required to act (NA when this is done in professional capacity)
Mr A holding 51% in LMN Ltd on whose advice Mr L has to act will be considered as a related party.
Holding, Subsidiary or Associate of such company
These all will be considered as related parties:
Any company which is subsidiary of a holding company to which it is also a subsidiary
PQR & LMN are both subsidiaries of ABC ltd. Thus, PQR also becomes a related party
Related Party Transactions under Companies Act 2013.
|Si No||Transactions as per Companies Act requiring approval of the Board by resolution||Transactions as per The Companies (Meetings of Board and its powers) Rules 2014 requiring approval by the company by resolution|
Goods and Material: Sale, purchase or supply
Sale/Purchase/Supply of goods/material directly or through an agent covering 10% or more of turnover OR one hundred Crores (whichever is lower).
Property: Selling or buying or leasing
Sale/Purchase of property directly or through an agent that is 10% or more of net worth OR one hundred Crores (whichever is lower). In case of leasing of property directly covering 10% or more of turnover OR one hundred Crores (whichever is lower).
Agent for (1) and (2) above
Availing or rendering of services directly or through an agent which is 10% or more of turnover OR fifty Crores (whichever is lower)
|(All the above limits are to be taken on all transactions done on a financial year basis)|