Related party transaction urgent

This query is : Resolved

Ashraf (Querist)
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24 August 2014 sir please solve following question on RPT

A pvt ltd company having 5 directors all are brothers by relation and they all are only shareholders of the company.
and
in a partnership firm all above directors are partners.

they supply goods from company to firm in which all above directors are partners. ( 90% of companies revenue from sale to firm )

How to compliance of section 188 Companies Act, 2013.

all directors and members are interested in transaction..

Vishal Jain

Vishal Jain (Expert)
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25 August 2014 the transaction appears to be in ordinary course. Ensure that the transactions are at arms length between the interested parties. No approval would then be required.

Ashraf

Ashraf (Querist)
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25 August 2014 Thank you very much sir
What if the Transaction not on arms length basis.?

or

Not in ordinary course of business. ?

Vishal Jain

Vishal Jain (Expert)
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25 August 2014 Then it would require special resolution of the non-interested shareholders, which would not be possible in your case since all shareholders are interested.
Hence, the transaction would have to be necessarily at armslength, otherwise penal provisions would be attracted.

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