As per COA 2013 a private company in which a director or manager or his relative is a member or director is considered as a related party.If they are a director, the case is clear. For public companies, the limit is 2% of shareholding.
But what is the limit in shareholding to be considered as a member of the private company? Whether owning a single share of small number of shares qualifies as being member, thus making said company a related party of the first company?
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Related party - Pvt Ltd Company in which Director or relative is a member or Director
Replies (3)
Quick Summary
As per the query raised by you, it seems that you are asking if a person is a member of two companies. whether the companies will be considered as the related party. Kindly note that if the person is not a director or manager or relative of such person, then it will not be covered u/s 2(76) of the Companies Act, 2013.
Ex- I am holding 1 share of TCS & Reliance each, it doesn't mean that both the companies will become related to each other provided I am not a managerial person in these companies.
Ex 2: If I am a director of TCS Limited & holding 1 share of M/s ABC private limited, then both the parties become a related party as per sub-clause (iv) of Section 2(76).
In case of any further queries, kindly mail me at casoravgupta @ gmail.com
Thanks & Regards
ACA. Sorav Gupta
(Practicing Chartered Accountant)
So if a director/manager of a company or their relative in A Pvt Ltd holds even a single share in any private limited company, say B Ltd., then B Pvt Ltd becomes a related party to A Pvt Ltd right? This would mean that the scope of related party becomes vast in case a director/relative holds shares in several other private companies in which they are NOT directors.
Yes, Mr. V R Ganesan.
In case of any further queries, kindly mail me at casoravgupta @ gmail.com
Thanks & Regards
ACA. Sorav Gupta
(Practicing Chartered Accountant)
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