The document outlines the provisions of the Companies Act, 2013, pertaining to related party transactions (RPTs), including their nature, definitions of related parties, and the required approvals and disclosures. It emphasizes the prohibition of certain transactions without board approval to mitigate conflicts of interest, detailing the types of transactions that fall under RPTs. Additionally, the document specifies consequences for non-compliance, including personal liability for directors and employees and potential penalties.

1. IOLCP

2.  Provisions of Companies Act, 2013 and Rules made there under
relevant to RPTs
 General Prohibition of RPTs
 Nature of RPTs
 Definition of Related Parties
 Relations included in the definition of relatives
 Key Managerial Personnel means
 Related Parties Transactions – Exceptions
 Approvals required for RPTs
 Participation / voting by the Director / Member in the meeting
 Particulars to be disclosed in the agenda of Board Meeting
 Particulars to be disclosed in the Explanatory Statement of Notice
of Company's Meeting
 Reporting requirements
 Consequences of not complying the provisions of Companies Act,
2013
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3.  Section 2(51),2(76),2(77), 188 of Companies
Act , 2013
 Rule 3 and 4 of Companies (Specification of
definitions details) Rules, 2014
 Rule 15 of Companies (Meetings of Board
and its Powers) Rules, 2014
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4. The Companies Act, 2013 prohibits some
transactions with the related parties without
the approval of the Board / Company to avoid
the conflict of interest of the company with
that of related parties .
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5. The following comes under RPT
 sale, purchase or supply of any goods or materials;
 selling or otherwise disposing of, or buying, property of
any kind;
 leasing of property of any kind;
 availing or rendering of any services;
 appointment of any agent for purchase or sale of
goods, materials, services or property;
 appointment to any office or place of profit in the
company, its subsidiary company or associate
company; and
 underwriting the subscription of any securities or
derivatives thereof, of the company
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6.  Director of the company or its holding
company or his relative;
 Key managerial personnel of the company
or its holding company or his relative;
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7.  Firm in which a director, manager or his
relative is a partner;
 Private company in which a director or
manager is a member or director;
 Public company in which a director or
manager is a director or holds along with
his relatives, more than two per cent. of its
paid-up share capital;
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8.  Holding, subsidiary or an associate company
of such company; or
 Subsidiary of a holding company to which
it is also a subsidiary;
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9.  Any person on whose advice ( except
professional capacity) , directions or instructions a
director or manager is accustomed to act:
 Any body corporate whose Board of Directors,
managing director or manager is accustomed to act
in accordance with the advice, directions or
instructions of a director or manager;
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10.  Members of a Hindu Undivided Family;
 Husband and wife; or
 Father and mother which includes step-father and
step-mother .
 Son which includes step-son and son’s wife.
 Daughter and Daughter’s husband.
 Brother and sister which includes step-brother and
step-sister.
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11.  Chief Executive Officer or the managing director
or the manager;
 the company secretary;
 the whole-time director;
 the Chief Financial Officer;
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12. All business transactions done in the ordinary
course of business done on arms’ length
basis means transactions done as if there is no
relations between parties .
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13.  Board approval in the meeting
 Company’s approval by special resolution in case paid-up
share capital is Rs 10 crores or
 Sale etc of goods or materials directly or through agent
exceeding 25% of the turnover of the company
 Selling etc of property / services directly or through agent
exceeding 10% of the net worth of the company
 Leasing of property directly or through agent exceeding 10%
of the net worth or turnover of the company
 Appointment to any office or place of profit exceeding Rs 2.50
lacs per month
 Underwriting commission exceeding 1% of net worth of the
company .
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14.  Director who is related party shall not
participate in the meeting
 Member who is related party shall not vote
on the resolution
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15.  Name of the related party and nature of relationship;
 Nature, duration of and particulars of the contract or
arrangement;
 Material terms and value of the contract or arrangement, if any;
 Advance paid or received for the contract or arrangement, if any;
 Manner of determining the pricing and other commercial terms,
both included as part of contract and not considered as part of the
contract;
 Whether all factors relevant to the contract have been considered,
if not, the details of factors not considered with the rationale for
not considering those factors; and
 Other information relevant or important for the Board to take a
decision on the proposed transaction.
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16.  Name of the related party;
 Name of the director or key managerial personnel
who is related, if any;
 Nature of relationship;
 Nature, material terms, monetary value and
particulars of the contract or arrangement;
 Other information relevant or important for the
members to take a decision on the proposed
resolution.
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17.  Disclose the particulars of RPTs in
the Board’s report

18.  Contract voidable at the option of the Board in case it is
not rectified by Board or Company within three
months.
 Director/employee concerned be personally liable to
indemnify the company any loss incurred
 Director/employee in case of listed company shall be
punishable with imprisonment which may extend to one
year or fine from twenty five thousands to five lacs
 Director/employee in case of other company shall be
punishable only with fine of rupees twenty five
thousands to five lacs