Applicability of Related Party Transactions under Companies Act 2013 and SEBI LODR

 Applicability of Related Party Transactions under Companies Act 2013 and SEBI LODR

Securities and Exchange Board of India (SEBI) has notified SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) on 2nd September, 2015 after following the consultation process. SEBI in its Board meeting dated 19th November, 2014approved the conversion of existing listing agreements into a single comprehensive regulation for various type of listed entities. The Listing Regulations shall come into force on the 90th day from date of publication in the official gazette i.e. 1st December 2015.

This Table contains 17 Points of Applicability of Related Party Transaction under Companies Act, 2013 and SEBI (LODR) Regulation in the Tabular format. This is beneficial for my Younger Member who is Company Secretary of Listed Company and who is newly join a company. Related party is now a very complex issues now a days amongst the Company Secretaries. Read and Please Give your Suggestions if any,

BY CS Divyanshu Sahni

Company Secretary

(Spice Group)

Mob: 9871027426

Mail id: Divyanshu.sahni@yahoo.in

Basis	Companies Act, 2013	SEBI LODR
Defination of  Related Party	As defined under Section 2 (76)	As defined under Section  2  (76) and AS-18
Scope of Transaction	Transactions covered  under Section 188 (1)	Transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged
Number of approvals	Approval of Audit Committee, Prior approval of Board and Shareholders	Prior approval of Audit Committee and Shareholder‟s  approval
Carve-out for ordinary course and arm’s length transactions	Excluded             from          the         purview of Section 188 (1)	No such carve-outs
Materiality	As provided under Rule 15	10% of annual consolidated turnover

Exclusions       while computing materiality	Transactions      in ordinary course and on arm’s length basis	No such exclusion
Need    for prior approval by shareholders	Prior approval required for material transactions	No such requirement.
Voting  by related parties	Related party     who      are parties to the transaction to abstain from voting	All related parties to abstain from voting
Applicability    to existing transactions	Applicable only to transactions entered into on or after April 1, 2014	All existing material related party contracts or arrangements entered into prior to    2nd   September and which may continue beyond such date.
Policy  on Material RPTs	No such requirement	Regulation 23
Exemption       to government companies	From     the        shareholders Resolution	From the  approval of Audit committee as well as shareholders
Review of transactions under omnibus approval	Audit    committee       may decide	Quarterly
Transactions which cannot be entered  into  under  omnibus approval	Audit committee to decide	No such requirement.
Selling and disposing of undertaking	Cannot grant    omnibus approval	No such restriction
Criteria for      omnibus approval	Prescribed      in  Rule  6A  of MBP Rules	Not prescribed
Validity of omnibus approval	One financial year	One year
Authority to set criteria for granting omnibus approval	Audit Committee subject to approval of Board	Audit Committee