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Related party transaction

gaurav agarwal (student) (34 Points)

22 June 2018

Dear Sir,

If two person are partners in a firm and director in other company so can do sales purchase transaction between firm and company?

what is the treatment on these type of transaction.

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CA Sunil Kumar (Chartered Accountant) (4524 Points)
Replied 22 June 2018

Company needs to seek the consent of Board of Directors for entering into any related party transaction sale, purchase or supply of any goods or materials and if any director is interested in any contract or arrangement with a related party, he shall not be present at the meeting when such matters are being discussed.
If sale, purchase or supply of any goods or materials exceeding twenty five percent of the annual turnover of the company with related party then company shall obtain prior approval by a special resolution from members.If a member is a related party, he shall not vote on special resolution, to approve such contract or arrangement.