Related Party Transactions: Companies Act, 2013

INTRODUCTION:

The introduction of Companies Act, 2013 has brought out a new phase to the corporate sector. To make Corporate Law more effective much reliance is placed on the disclosure. There are number of sections which places reliance on disclosure norms, one of such section is section-188 relating to 'Related Party transaction' which combines the provisions of Sections -297 & 314 along with some more provisions.

In order to mitigate the practical difficulties and to clarify the ambiguity of law, Ministry of Corporate Affairs have been providing on regular basis amendments, clarifications, notifications, circulars etc.

PROVISIONS RELATING THE RELATED PARTY

The recently notified section 188 of the Companies Act, 2013 talks about the approval required in order to enter into related party transactions. The section provides for the various transactions which cannot be entered into by the company without the consent of the Board of Directors. Meaning thereby