This PPT discusses law provisions of the Companies Act, 2013 and rules made thereunder relating to getting the approval of Board and Company with respect to the related party transactions .

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