Rent to shareholder or relative of director

As per Section 188 of CA 2013, except with the consent of Board by a resolution passed in its meeting, no comany shall enter into the transaction of Leasing of property of any kind [clause (c)] or availing rendering of any service [clause (d)] with a related party. Since the property belongs to a related party of the Director, this transaction squarly falls under Section 188(1). 

Further in the following situations every such related party transaction require prior approval of members in General Meeting by Special Resolution: 

1. if   the paid up capital of the company is more than  Rs.10 crore; or

2. the amount involved exceeds the limits prescribed under Rules(here it means  ten percent of the net worth or exceeding ten percent of turnover)

and in the GM the member interested in the Transaciton shall not participate and vote.

Exemption: Nothing in this section will be applicable if the transaciton is done

a) in the ordinary course of business of the Company AND 

b) at arm's length price.

These are the provisions of CA 2013. For to determine as to whether your transaction falls under the exempted category or not, the call must be yours.

Regards