RELATED Party TRANSACTIONS (section 188)

Related Party Means 1. Director 2. Director’s Relative 3. KMP 4. KMP’ s Relative Private Company Where Director/ Manager is Director / Member Public Co. in which Director/ Manager is Director or 2. Shareholder of 2% or more Paid Up Capital (individually/ along with relative) FIRM in which Director / Manager/ Their Relatives Is Partner

Related Party Means Body Corporate Whose (i) BOD (ii) MD or (iii) Manager Acts as per advice, directions, instructions Of a. Director or b. Manager of Company a. Holding Company b. Subsidiary Company c. Associate Company Any person on whose instructions, directions, advice - a. Director b. Manager act A co-subsidiary company ( two companies having a same holding company)

 Companies having paid up share capital of Rs 10 Cr or more is require to obtain prior approval of member’s in general meeting case may be to enter into contracts in which Directors are interested  Exception :- 1) If transaction or contract is entered in ordinary course of business 2) Done on Arm’s length basis. 3) In case of transaction between holding company and subsidiary company, no need to pass special resolution in subsidiary company.  If any transaction is below Rs 5 Lacs pertaining to sale, supply or purchase of material then no need to make entry in register maintained under 189 of the act.

 Sale, purchase, or supply of any goods or materials;  Selling or otherwise disposing of, or buying property of any kind;  Leasing of property any kind;  Availing or rendering of any services;  Appointment of any agent for purchase or sales of goods or materials, services or property;  Such related party’s appointment to any office  Underwriting the subscription of any securities or derivatives thereof of the company

 With prior approval of company by special resolution, following companies can enter into Contracts/ arrangements -  A company having a paid-up share capital of Rs. 10 Crore or more  Transaction exceeding 25 % of the annual turnover or 10% of the net worth of the company whichever is higher in a financial year.  Relates to appointment to any office or place of profit in the company/ subsidiary company/ associate company at a monthly remuneration exceeding Rs. 2,50,000/-.

 For other companies / transactions -- prior consent of BOD by Board resolution  If contract is already entered into -- obtained within 3 months approval of the BOD/ Shareholders.  Notice of Board meeting should contain 1. prescribed particulars 2. explanatory statement to be annexed to the notice of general meeting  No member can vote on such special resolution if such member is a related party  interested Director cannot participate in discussion on the approval of related party transactions  In case of default -- contract is voidable at the option of the Board Directors concerned shall indemnify the company against any loss incurred by Company

 Every director shall disclose his concern or interest in FORM MBP1  At the first meeting of the board in which he participates as a director  At the first meeting of the board in every financial year  Whenever there is change in the disclosures already made, then at 1st BM held after change.  Every director or KMP shall within period of 30 days of his appointment- disclose his concern or interest in other associations.  Every such contract or arrangement be disclosed in BOARDS REPORT