RELATED PARTY TRANSACTIONS ( RPTS)

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Index 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,

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Provisions of Companies Act, 2013 and Rules made thereunder relevant to RPTs

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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General Prohibition of RPTs

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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Nature of Related Party Transactions

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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Definition of Related Parties-Natural persons by virtue of their position in the company…….continued

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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Definition of Related Parties- Association of persons because of influence of natural persons who are in position in the company ……….continued

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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Definition of Related Parties- Association of persons because of position of the company……..continued

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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Definition of Related Parties- Persons / Association of persons who influence or be influenced by the natural person in position in the company.

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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Relations included in the definition of relatives

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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Key Managerial Personnel means

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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Related Parties Transactions – Exceptions

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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Approvals required for RPTs

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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Participation / voting by the Director / Member in the meeting

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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Particulars to be disclosed in the agenda of Board Meeting

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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Particulars to be disclosed in the Explanatory Statement of Notice

of Company's Meeting 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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Reporting Requirements

Disclose the particulars of RPTs in the Board’s report

Consequences of not complying the provisions of

Companies Act, 2013 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

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