Related Party Transaction

CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 1 RELATED PARTY TRANSACTIONS RELATED PARTY- As Per Section 2(76) of the Companies Act, 2013, R elated Party means- a) A director b) Relative of director c) KMP d) Relative of KMP e) A Firm, in which a director, manager or his relativ e is a Partner f) A Private Company in which a director or manager is a member or director g) A Public Company in which a director or manager is a director and holds more than 2% of Paid-up Capital along with his relatives h) Any Body Corporate whose BOD/ MD/ Manager accustome d to act in accordance with instructions of director/ manager i) Any person whose advise director or manager is accu stomed to act j) A Holding Company [not applicable on Private Compan y] k) A Subsidiary Company [not applicable on Private Com pany] l) An Associate Company [not applicable on Private Com pany] m) A Subsidiary of a holding company to which it is al so a subsidiary [not applicable on Private Company] n) Director of Holding Company o) KMP of Holding Company CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 2 MAIN CONCEPT OF SECTION 188- 1) Board resolution 2) Prior Special Ordinary resolution (After amendment on 25th May, 2015) 3) Approval or omnibus approval of Audit Committee (if apply). REQUIREMENT OF BOARD RESOLUTION- Company shall Pass Board Resolution in respect to a ny contract/ arrangement with a related party with respect to- a) Sale, Purchase or Supply of any goods/ materials. b) Selling or Buying of property of any kind. c) Leasing of property of any kind. d) Avail or Render of any service. e) Appoint any agent for Purchase or Sale of goods/ ma terials/ Services/ Property. f) Appoint Related Party to any office or place of pro fit in the Company, its Subsidiary Company or Associate Company. g) Underwriting the subscription of any securities of the Company. CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 3 COMPLIANCE RELATING TO BOARD RESOLUTION- REQUIREMENT OF ORDINARY RESOLUTION- The Company required to obtained prior Ordinary Res olution where the transactions exceeds the following limits- S.NO. NATURE OF TRANSACTIONS LIMITS 1. Sale, Purchase or Supply of any goods or materials directly or through agents 10% of turnover or Rs. 100 crores (whichever is lower) 2. Selling or buying of Property of any kind directly or through agents 10% of net worth or Rs. 100 crores (whichever is lower) 3. Leasing of Property of any kind 10% of net worth or 10% of turnover or Rs. 100 crores (whichever is lower) 4. Avail or Render any services directly or through agents 10% of turnover or Rs. 50 crores (whichever is lower) 5. Appoint Related Party to any office or place of profit in the Company, its Subsidiary Company or Associate Company Monthly Remuneration exceeds Rs. 2,50,000/- 6. Underwriting the subscription of any securities of the Company Remuneration exceeds 1% of Net worth DISCLOSE IN AGENDA OF BOARD MEETING INTERESTED DIRECTORS Name of Related Party, Nature of Relationship with Related party, Nature/ Duration/Value/ Particulars of Contract, Any Advance paid or received for the contract etc. Not present at the board meeting In case of Private Company, Interested Director can participate in board meeting after disclosed the interest U/S 184 (After notification on 5th June, 2015) CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 4 Note- Turnover or Net Worth shall be computed on the bas is of Audited Financial Statement of Preceding Year. COMPLIANCE RELATING TO ORDINARY RESOLUTION- NOTE- Requirement of Ordinary resolution shall not be ap plicable for transactions entered between a Holding Company and its Subsidiary whose accounts are consolidated with the Holding Company. NOTE- not required to comply with any aforesaid complian ce, if any transaction entered by Company in its ordinary course of business except s uch transactions are not on arm’s length basis. REQUIREMENT OF APPROVAL OF AUDIT COMMITTEE If any Company required to constituting Audit Commi ttee under Section 177 of the Companies Act, 2013, also required to get approval or omnibus approval of said Committee after passing board resolution. CONTAIN IN EXPLANATORY STATEMENT IN NOTICE OF GENERAL MEETING MEMBERS OF COMPANY WHICH IS RELATED PARTY Name of Related Party, Name of director or KMP who is related, Nature of Relationship, Nature or Duration or Value or Particulars of Contract. Not vote at the general meeting In case of Private Company, Members of the Company can vote at the general meeting (After notification on 5th June, 2015) CS SHIVAM SINGHAL E-mail id - csshivamsinghal17@gmail.com ACS, B.COM Contact - 9359135062, 8750993347 5 Features of Omnibus Approval- 1. Omnibus approval shall not be made for transactions in respect of selling or disposing of the undertaking of the Company. 2. Omnibus approval shall be valid for a period not ex ceeding 1 financial year and shall require fresh approval after the expiry of such fin ancial year. 3. Where Audit Committee not have requisite informatio n about related party transactions, then the committee may make omnibus a pproval for such transactions subject to their value not exceeding Rs. 1 crore pe r transaction. OTHER COMPLIANCE UNDER SECTION 188- 1) Every Contract with related party shall be referred in Board’s report in Form AOC-2. 2) If any Contract made by directors or employees of t he Company without take Board resolution or Ordinary Resolution must ratified wit hin 3 Months from the date of such Contract otherwise such contract shall be void. NOTE- Company can proceed against director or employees who entered into contract with related party in contravention of provision of Sect ion 188. PENALTY Any Director or Employees of the Company who violat e the provisions of Section 188 In case of listed company In case of other company IMPRISONMENT Maximum 1 Year, or FINE Minimum Rs. 25,000 Maximum Rs. 5,00,000 or OR BOTH FINE Minimum Rs. 25,000 Maximum Rs. 5,00,000