A Ltd. a public limited company holds 51% shares of B Ltd., 49% shares of B Ltd. holds by the C Ltd.
Now A Ltd. wants to sales goods to C Ltd. then please specify that this transaction are in the nature of related party transaction ?
CA Puneet Gupta (-) (69 Points)
18 March 2016A Ltd. a public limited company holds 51% shares of B Ltd., 49% shares of B Ltd. holds by the C Ltd.
Now A Ltd. wants to sales goods to C Ltd. then please specify that this transaction are in the nature of related party transaction ?
Amit Kanunga
(Article Assistant and Post Gradute)
(644 Points)
Replied 18 March 2016
Yes As per AS 18, it is considered as related party transactions indirectly...
Jacky
(Accountant & CA Final Student)
(320 Points)
Replied 18 March 2016
i think here chain rule will apply
0.51*0.49= 25% as it is more than 20% in this case
& therefore there is substantial interest in the voting power of the other enterprise
Amit Kanunga
(Article Assistant and Post Gradute)
(644 Points)
Replied 18 March 2016
Examples of related parties using Company A as the reporting enterprise:
RISHABH ARORA
(Company Secretary in Practice )
(194 Points)
Replied 19 March 2016
As per Companies Act, 2013 unless a public company in which a director or manager is a director and holds along with his relatives, more than two per cent. of its paid-up share capital;
So as all the companies in your query are public limited companies and C Ltd also not becomes Associate of A ltd as A ltd not holds any shares in the C ltd.
It will not be counted as related party transaction.
ACS Parul Rawat
(Entrepreneur | Corporate Law Advisor | Lawyer in Making | AIR-8)
(218 Points)
Replied 19 March 2016
Hi Puneet
As per Section 2(76), the relationship doesnt fall under the defination of Related Party and hence as per Companies Act, 2013 it is not a Related Party Transaction.
Amit Kanunga
(Article Assistant and Post Gradute)
(644 Points)
Replied 19 March 2016
Originally posted by : Parul Rawat | ||
Hi Puneet As per Section 2(76), the relationship doesnt fall under the defination of Related Party and hence as per Companies Act, 2013 it is not a Related Party Transaction. |
Hi Parul,
Can u read the point 9 of the below:
As per Section 2(76) of the Companies Act, 2013 –
Related Party ‘Related party’ has got a lot of significance in the public reporting scenario.
In case of public companies public and society stake is involved and in case of private companies, even if public stake is not involved, the stake of other elements of society may be directly or indirectly involved. In such situation, maintaining transparency in the working of a company or a body corporate is very much essential. Transactions with related parties may if not entered into with due care may give a wrong perception and may hinder the transparency of the entity. This has given the regulators to keep a check on related party transactions by way of legal provisions in various legislations. Section 2(76) of the Companies Act, 2013, read with Rule 3 of the Companies (Specification of definitions details) Rules, 2014, defines the term Related Party. The provisions with respect to Related Party Transactions is covered under Section 188 of the Companies Act, 2013. This article covers the former part, i.e. the definition and meaning of related party as per the 2013 Act. Section 2(76) defines related party as below: Section 2(76) “related party”, with reference to a company, means—
1. a director or his relative;
2. a key managerial personnel or his relative;
3. a firm, in which a director, manager or his relative is a partner;
4. a private company in which a director or manager or his relative is a member or director;
5. a public company in which a director or manager is a director and holds along with his relatives, more than two per cent of its paid-up share capital;
6. 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;
7. any person on whose advice, directions or instructions a director or manager is accustomed to act:
8. that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;
9. any company which is— – a holding, subsidiary or an associate company of such company; or – a subsidiary of a holding company to which it is also a subsidiary;
10. such other person as may be prescribed;
lokeshkumaar
(student)
(77 Points)
Replied 19 March 2016
ACS Parul Rawat
(Entrepreneur | Corporate Law Advisor | Lawyer in Making | AIR-8)
(218 Points)
Replied 19 March 2016
Hi Amit,
Even after interpretating Point 9 it is not covered in RPT, as per my view.
Amit Kanunga
(Article Assistant and Post Gradute)
(644 Points)
Replied 19 March 2016
Originally posted by : Parul Rawat | ||
Hi Amit, Even after interpretating Point 9 it is not covered in RPT, as per my view. |
Hi Parul,
For this Related party tnx
is their any other clause or section ?
ACS Parul Rawat
(Entrepreneur | Corporate Law Advisor | Lawyer in Making | AIR-8)
(218 Points)
Replied 19 March 2016
Section 188 to chk whether the transaction is RPT or not n Section 2(76) to chk whthr party is related or not as per CA 2013
Abhimanyu
(CA)
(316 Points)
Replied 20 March 2016
Abhimanyu
(CA)
(316 Points)
Replied 20 March 2016
Abhimanyu
(CA)
(316 Points)
Replied 20 March 2016
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