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Related party of transactions

08 November 2016

Dear All

Will monthly payment of salary as employee to son of Managing Director be treated as Related Party Transaction. Approval from Members already taken.

And does it is required to enter each months salary in Register of Transactions pursuant to Section 189 of Companies Act, 2013.

Please answer

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2 Replies

nidhigoel89 (Company Secretary ) (594 Points)
Replied 08 November 2016

Hello,

The above transaction may fall as per Sec 188(1) (d) of CA, 13 and therefore should be recorded as per Sec 189.

Provided further that if the above transaction is at arm length basis than the same will be exempted by the above provisions.

Regards

Nidhi

Jatin Bajaj (CS) (2928 Points)
Replied 09 November 2016

According to section 188, 189, Read with Rule 16 of Meeting of Board and Power Rules, the above mentioned transactions shall be covered under related party transaction but if such transaction is at arm Length basis then no need of any Board or Shareholder approval. But if such transaction shall be mentioned under the register maintained under section 189 of the Companies Act