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Related party transactions

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709)     04 May 2014

PRACTICING CS Jalandhar 9914558709 
 197 likes  4633 points

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If there are two companies having same directors and shareholders. One company is selling 80% of its products to the other at arm length price which is in ordinary course of business. Then whether approval is required to be obtained of Board or Shareholders? And now as there are same Directors and Members, then how to obtain the approval?

CS GK Murty (Company Secretary)     05 May 2014

CS GK Murty
Company Secretary 
 12 likes  225 points

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As per section 188 of the CA 2013, nothing in this shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm’s length basis. Hence in your case, approval is not warranted provided it meets the crriteria "Ordinary course of business" & "Arm's length basis".




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