Related Party Transactions in Pvt Ltd

AOC -2 required two kind of disclosure,all RPT txn which are not at arm's length basis or in ordinary course of business and second one is ALB+ OCB txn but are material in nature, material is not defined, so you can take reference of Rule 15 ,

it will better if you provide all these info in Notes to account as per AS-18* ( and specific disclosure in board report for Rent + Salary to KMP)

Board Approval is required for RPT which are not either in usual course of business or/& at ALP basis.

Loan Taken From Director - Falls under 2(1)(c)*
Loan Given to subsidiary - 186 ( Board approval required)
Salary To KMP - Check at Arms length and and not breaching 2.5Lacs Limit
Rent paid for office Premise - OCB, but satisfy that in OCB+ALP

Due to pvt company, so any designated director who is entrusted by board to discharge duty of audit committee, else Board has to approve Rent part!

Loan From Director falls under 179 - So Board Approval required

Loan To Subsidiary - 186 ( Board Approval Required)

Salary To KMP - appointment already approved so unless not comply with OCB+ALP no further approval

Rent Paid For Premise - Board Has to take a Note, approval only when not fulfilling ALB+OCB.

*Disclaimer

1. AOC-2 cover transaction which fall in 188 only.

c) Salary to KMPs.

doesn't fall in 188. so not required to mention in AOC-2

All other transation with related party needs to mention in AOC-2

But Salary to KMP is as per AS 18 so to be included in Board's Report and notes to accounts.

 

Further in AOC 2 in which head will it be included?

Salary to KMP is not part of AOC-2.

So all transactions to be included in Boards report and Notes to accounts as RPT during the year  

and excluding salary others to be included in AOC2?

Remuneration to kmp may not be RPT but transaction with related party , its a debatable matter , because AOC -2 demands contracts or arrangements with related party , so some views are that office or place of profit would be something which other than legitimate remuneration of kmp and exceeding 2.5 Lacs is material , while other view is remuneration is a contractual kind of payment to kmp so if it's its not in ALB or OCB or material should be disclosed in AOC -2 and there is no harm as such to disclose..

In case the remuneration is paid by that pvt co. to KMP of Rs. 40 LPA and later co. got the same reimbursed from a LLP. Both the LLP and Co have common partners and directors.  

 

Will this required Board or SR approval? 

and will this be mentioned in AOC-2 and on what basis Arm's Length basis as its a Pvt Ltd. 

Prima Facie, It's a Transaction with related party ,because LLP is under same control, and required AOC-2 Disclosure, if you go into technicality then it's a borrowing by company and as per fact it's not normal course of business and ALP(it will be subject to peer check - Remuneration of KMP) , and will require audit committee approval/note and not require any board approval u/s 188, but may fall under 179,180 ....But practically it's my personal view,that, reimbursement by LLP to company is not exempted u/r 2(1)(c) unless LLP is shareholder ,which is not in this case, so such reimbursement txn itself is not tenable....