RELATED PARTY TRANSACTIONS [Sec. 185 & Sec. 188 of Cos. Act, - - PowerPoint PPT Presentation

▶
related party transactions sec 185 sec 188 of cos act
SMART_READER_LITE
LIVE PREVIEW

RELATED PARTY TRANSACTIONS [Sec. 185 & Sec. 188 of Cos. Act, - - PowerPoint PPT Presentation

Oct 31, 2022 477 likes •1.04k views

RELATED PARTY TRANSACTIONS [Sec. 185 & Sec. 188 of Cos. Act, 2013] Reference given to Cos. (Amendment) Act, 2017 & SEBI (LODR) Regulations. Interactive discussion & presentation by Gaurav N Pingle, Practising Company Secretary |

slide-1
SLIDE 1

RELATED PARTY TRANSACTIONS [Sec. 185 & Sec. 188 of Cos. Act, 2013] Reference given to

  • Cos. (Amendment) Act, 2017

& SEBI (LODR) Regulations. Interactive discussion & presentation by Gaurav N Pingle, Practising Company Secretary

| Program on Related Party Transactions at ICSI, WIRC | | May 11, 2019 |

slide-2
SLIDE 2

HOLDING COMPANY

2

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-3
SLIDE 3

What is the impact of the amendment in the definition of ‘Holding Company’

3

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-4
SLIDE 4

Can Company Incorporated Outside India be a Holding Company?

4

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-5
SLIDE 5

Can LLP be a Holding Company?

5

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-6
SLIDE 6

SUBSIDIARY COMPANY

6

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-7
SLIDE 7

What is the impact of the amendment in the definition of ‘Subsidiary Company’

7

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-8
SLIDE 8

Can LLP be a Subsidiary?

8

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-9
SLIDE 9

Can Company Incorporated Outside India be a Subsidiary Company?

9

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-10
SLIDE 10

ASSOCIATE COMPANY

10

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-11
SLIDE 11

What is the impact of the amendment in the definition of ‘Associate Company’

11

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-12
SLIDE 12

Can Company Incorporated Outside India be an ‘Associate Company’ of an Indian Company? 12

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-13
SLIDE 13

Can LLP be an Associate of another company – under Cos. Act, 2013

13

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-14
SLIDE 14

RELATED PARTIES

14

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-15
SLIDE 15

What is the impact of the amendment to the definition

  • f ‘Related Party’ – under Cos. Act, 2013

15

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-16
SLIDE 16

Whether Company incorporated outside India – which is an ‘Associate Company’ – is a ‘Related Party’ under

  • Cos. Act, 2013

16

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-17
SLIDE 17

What is the scope of ‘Venturer Company’ & ‘Investing Company’?

17

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-18
SLIDE 18

AUDIT COMMITTEE

18

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-19
SLIDE 19

Who determines that the transaction with related party is in the ordinary course of business? Is it the board of directors or the Audit Committee?

19

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-20
SLIDE 20

Which transactions can Audit Committee recommend to BoD?

20

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-21
SLIDE 21

Which transactions cannot be ratified by Audit Committee?

21

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-22
SLIDE 22

Which transactions do not require the approval of Audit Committee u/s 177 of Cos. Act, 2013?

22

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-23
SLIDE 23

Whether transactions are between a holding company and its wholly owned subsidiary company will section 177 of the Act be attracted? 23

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-24
SLIDE 24

Can approval of Audit Committee to a related party transaction be granted by passing a circular resolution? 24

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-25
SLIDE 25

The Audit Committee of a company and the board had deferred the matter for the approval

25

board had deferred the matter for the approval

  • f a related party transaction to the shareholders.

Can shareholders approve the transactions without recommendations

  • f

the Audit Committee/Board?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-26
SLIDE 26

LOANS TO DIRECTORS

26

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-27
SLIDE 27

Whether the provisions of Sec. 185 of Cos. Act, 2013 (as substituted) are retrospective in nature? 27

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-28
SLIDE 28
  • Co. proposes to give L S G to Director of Company –

Whether such transaction is permitted u/s 185 of Companies Act, 2013 28

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-29
SLIDE 29
  • Co. proposes to give L S G to a Firm in which director is

a partner – Whether such transaction is permitted u/s 185 of Companies Act, 2013 29

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-30
SLIDE 30
  • Co. proposes to give Loan to a LLP in which director is a partner /

designated partner – Whether such transaction is permitted u/s 185

  • f Cos. Act, 2013

30

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-31
SLIDE 31
  • Co. proposes to give L S G to a HUF in which director is a Karta or

Co-parcener – Whether such transaction is permitted u/s 185 of Cos. Act, 2013

31

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-32
SLIDE 32

Can a Public Co. give L S G to a Private Co. (in which director is common). What are the conditions? 32

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-33
SLIDE 33

A Co. may give L S G to certain parties by passing a Special Resolution. Whether the resolution is ‘prior’ approval? 33

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-34
SLIDE 34

Can a Public Co. give L S G to a Public Co. (in which director is common). What are the conditions? 34

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-35
SLIDE 35

Can a Private Co. give L S G to a Body Corporate (in which director is common). What are the conditions? 35

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-36
SLIDE 36

Can a Public Co. give L S G to a Body Corporate (in which director is common). What are the conditions? 36

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-37
SLIDE 37

For which transactions, Sec. 185 of the Act is not applicable at all?

37

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-38
SLIDE 38

DSC Pvt. Ltd. provides a Loan to XBRL Pvt. Ltd. There are common directors in both the companies.

L / G / S between 2 companies:

38 There are common directors in both the companies. DSC Pvt. Ltd. is Holding Co. of XBRL Pvt. Ltd. – Whether Section 185 of the Act is applicable?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-39
SLIDE 39

DSC Pvt. Ltd. provides a Loan to XBRL Pvt. Ltd. There are common directors in both the companies.

L / G / S between 2 companies:

39 There are common directors in both the companies. XBRL Pvt. Ltd. is WOS of DSC Pvt. Ltd. – Whether Section 185 of the Act is applicable?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-40
SLIDE 40

DSC Pvt. Ltd. provides a Loan to XBRL Pvt. Ltd. There are common directors in both the companies.

L / G / S between 2 companies:

40 There are common directors in both the companies. DSC Pvt. Ltd. is Holding Co. of XBRL Pvt. Ltd. – Whether Section 185 of the Act is applicable?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-41
SLIDE 41

RELATED PARTY TRANSACTIONS

41

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-42
SLIDE 42

Will a preferential allotment of shares to a related party be treated as related party transaction under Section 188 of the Act?

42

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-43
SLIDE 43

Whether the change in definition of ‘related parties’ has an impact on the compliances for ‘Related Party Transactions’

43

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-44
SLIDE 44

Whether approval process [by the Audit Committee] for Related Party Transactions has changed by the Cos. (Amendment) Act, 2017?

44

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-45
SLIDE 45

Whether approval process [by the Board of Directors] for Related Party Transactions has changed by the Cos. (Amendment) Act, 2017?

45

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-46
SLIDE 46

Whether approval process [by Shareholders] for Related Party Transactions has changed by the Cos. (Amendment) Act, 2017?

46

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-47
SLIDE 47

Whether rendering of service which is covered under proviso to Section 197(4) would attract provisions of Office of Profit under Section 188(1)? 47

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-48
SLIDE 48

X Ltd. Has one subsidiary Y Pty Ltd. In South Africa and another subsidiary Z Pte Ltd. in Mauritius. When a 48 and another subsidiary Z Pte Ltd. in Mauritius. When a transaction takes place between Y Pty Ltd. and Z Pte Ltd., the amount gets consolidated in the accounts of X

  • Ltd. Whether the provisions of Indian law for such

transactions between Y Pty Ltd. and Z Pte Ltd. will be applicable?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-49
SLIDE 49

The Managing Director of a listed company gives his building on rent to the company for

49

gives his building on rent to the company for registered office and rent agreement is executed for 11 months. Whether approval from members will be required every year if the transaction is not a material transaction?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-50
SLIDE 50

Would the appointment of a Managing Director

  • f a holding company as Chairman in a

50

  • f a holding company as Chairman in a

subsidiary company be treated as related party transaction even if he is not getting any remuneration from subsidiary?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-51
SLIDE 51

Whether approval of the board will need to be taken by a wholly owned subsidiary which is

51

taken by a wholly owned subsidiary which is not required to constitute and Audit Committee, for entering into transactions with related parties in the ordinary course of business and on an arm’s length basis?

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-52
SLIDE 52
  • Cos. Act, 2013 Vs SEBI Listing Reg.
  • Sr. No.

Points of Comparison 1 Related Party 2 Specified Transaction

52

3 Pricing Parameter 4 Ordinary Course of Business 5 Board Approval 6 Audit Committee’s Omnibus Approval

| Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary| May 11, 2019

slide-53
SLIDE 53
  • Cos. Act, 2013 Vs SEBI Listing Reg.
  • Sr. No.

Points of Comparison 7 Trigger point of shareholders’Approval 8 Resolution at shareholders’ meeting 9 Voting Restrictions at shareholders’ meeting

53

9 Voting Restrictions at shareholders’ meeting

| Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary| May 11, 2019

slide-54
SLIDE 54

Any further inputs & questions from participants?

54

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

slide-55
SLIDE 55

55

Thank you ICSI – WIRC for the wonderful

  • pportunity!! 

Thank you Members for active participation! 

May 11, 2019 | Program on Related Party Transactions at ICSI, WIRC | | Gaurav Pingle, Practising Company Secretary|

Thank you Members for active participation!  (E): gp@csgauravpingle.com (W): www.csgauravpingle.com (M): +91 9975565713