Related party Transactions Approval under SEBI and Companies Act 2013 ???

Related  party  Transactions
Related  party  Transactions
Related  party  Transactions

Points to be considered:

  1. Related Party Meaning
  2. Under Companies Act, 2013 in Section 2(76)

(i)a director or his relative;

(ii) a KMP or his relative;

(iii) a director other than an ID, or KMP of the holding company or his relative;

iv) a firm, in which a director, manager or his relative is a partner;

(v) a private company in which a director or manager or his relative is a member or director;

(vi) a public company in which a director or manager is a director and holds along with his relatives, more than 2% of its paid-up share capital;

(vii) 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 (except on professional basis);

(viii) any person on whose advice, directions or instructions a director or manager is accustomed to act (except on professional basis):

(ix) any body corporate which is—

(A) a holding, subsidiary or an associate company;

(B) a subsidiary of a holding company to which it is also a

subsidiary; or

(C) an investing company or the venturer of the company;

Rule 3 of Companies (Specification of Definition Details) Rules, 2014, prescribes that a director other than an independent director or key managerial personnel of the holding company or his relative with reference toa company shall also be deemed to be a related party.
As per Section 2(77) of the Act, relative with reference to any person, means anyone who is related to another, if—i. they are members of a Hindu Undivided Family;ii. they are husband and wife; oriii. one person is related to the other in such manner as may be prescribed. 

Under SEBI (LODR ) 2015 in Regulation 2(1)(zb)

Related  party  Transactions
  1. Any transaction involving any amount not exceeding 1 crore rupees is entered into by a director or officer of the company without obtaining the approval of the Audit Committee and not ratified by the Audit Committee within 3 months from the date of      the transaction, such transaction shall be voidable at the option of the Audit Committee    
  • MATERIAL TRANSACTIONS  :
  • A transaction with a related a party exceed  10% of  the annual consolidated turnover of  the listed company (previous and proposed )
  • A transactions involving payments in respect to brand usage /royalty exceed  5% of  the annual consolidated turnover of  the listed company (previous and proposed )
  • OMNIBUS APPROVAL FOR RPT’S (As per Regulation 23 (3) of SEBI LODR 2015)
  • Valid  for  one   year  
  • Approval specify the
  • name of RP,
  • nature and period of Transaction
  • Maximum amount
  •  Omnibus approval can be given even if all such above details are not mentioned subject to value not exceeding one crore per transactions