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Related Party Transaction

Sneha Harlalka (Company secretary) (62 Points)

15 September 2020  

A Director of a company leases out his office space to his company for a consideration i.e monthly rent. Does it come under the purview of Related Party Transaction. If yes, What procedure is required to be followed for shifting RO of the Company, what steps are to be taken to be in conservant with RTP Transaction? Format of BR for the same? 

 2 Replies

prasad Nilugal (Sr . Accountant and GST Practitioner . )   (7011 Points)
Replied 15 September 2020


1 )  As per section  2(76)  of the companies act 2013  , a director  or his relative are related party .  

2) As per section 188 (1) (c) of the companies act 2013 - except with the consent  of the Board of Directors given by resolution at the meeting  of the Board and subject to such  condition as may be prescribed  no  company shall enter into contract or arrangement with a related party with respect  to leasing of property of any kind .  

So you have pass  resolution first . Go through companies act 2013

mayur borhade (89 Points)
Replied 22 September 2020

Also note that if transaction between Director and company is arm's length basis then there is no requirement to pass any resolution.

Refer section 188 again.

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