Checklist On Related Party-188 4q1o2l

Ansal Properties & Infrastructure Limited Checklist on Section 188 of Companies Act, 2013 - Related Party Transactions (Corresponding Sections- 297 & 314 of Companies Act, 1956)

Section

Provisions of Sections

188(1)

Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to:

Checklist Provisions of Section 188 shall apply if any of the sub points within point no. 2 plus any of the sub points within both points No. 3 and point No 4 is “YES” YES

NO

1. Whether there is contract or arrangement 2. whether the Contract arrangement is in relation to:-

a) sale, purchase or supply of any Sale, purchase or supply goods or materials. of any goods Sale, purchase or supply of any materials b) selling or otherwise disposing of , Selling or otherwise disposing of or buying, property of any kind, property of any kind Buying property of any kind c) leasing of property of any kind d) availing services

or

rendering

of

Leasing of property of any kind any Availing of any service Rendering of any service

e) appointment of any agent for Appointment of any purchase or sale of goods, agent for purchase materials, services or property. of goods, materials, services or property Appointment of any agent for sale of goods, materials, services or property

or

f) such related party’s appointment to any office or place of profit in Related party’s appointthe company, its subsidiary ment to any office or company or associate company; place of profit in the company.

YES

NO

Explanation:The expression “office or place of profit” means any office or place(i) where such office or place is held by a director, if the director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise; (ii) where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from the company anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

Related party’s appointment to any office or place of profit in the subsidiary company

Related party’s appointment to any office or place of profit in the associate Company

g) underwriting the subscription of any securities or derivatives Underwriting the subscription of any securitthereof, of the company ies or derivatives.

Resolution of the Board should be ed only in a duly convened Board Meeting and not otherwise {i.e. not by way of Resolution by Circulation/Directors committee meeting}

As per Section 2(76)“related party”, YES NO with reference to a company, 3. Whether the contract means— arrangement entered by company with : (i) a director or his relative; (i) a director or his relative (ii) a key managerial personnel or his relative; (ii) a key managerial personnel or his relative; (iii) a firm, in which a director, manager or his relative is a partner; (iii) a firm in which director or his relative is a partner (iv)a firm in which Manager or his relative is a partner

(iv) a private company in which a director or manager is a member or (v) a pvt. Co. in which director; director is a member

(vi) a pvt. Co. in which director is a director (vii) a pvt. Co. in which Manager is a member (vii) a pvt. Co. in which Manager is a Director

(v) a public company in which a director or manager is a director or (vii) a public Co. in which holds along with his relatives, more director of the company than two per cent of its paid-up share is a Director; or capital; (viii) a public Co. in which director of the company holds along with his relatives more than 2% of its paid up share capital (ix) a public Co. in which Manager of the Company is a Director; or (x) a public Co. in which Manager of the company holds along with his relatives more than 2% of its

or the

paid up share capital 3. Whether the contract arrangement entered by company with: (vi) 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;

(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act.

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;

YES

or the

NO

(xi)any BODY CORPORATE whose BOD/MD/Manager is accustomed to act in accordance with the advice, directions or instructions of a director/ manager of the company; (xii)any PERSON on whose advice/ directions/ instructions the director/ manager of the company is accustomed to act; (excludes advice/ directions/ instructions given aforesaid in professional capacity)

(viii) any company which is— (A) a holding, subsidiary or an associate company of such company; or

(xiii) its holding, subsidiary or an associate company

(B) a subsidiary of a holding company to which it is also a subsidiary;

(xiv) its fellow subsidiary/ chain subsidiary

(ix) such other person as may be prescribed;

(xv) any other person as prescribed by way of rules

Provided also that nothing in this subsection shall apply to any transactions entered into by the company in the ordinary course of business other than transactions which are not on arm’s length basis

4. whether the transaction has NOT been entered into by the Company in its ordinary course of business AND on arm’s length basis

[

YES Third Proviso to section 188(1)

Proviso to Section 188(1)

NO

Provided that no contract or 5. In case of Related Party arrangement, in the case of a Transactions compliance has to company having a paid-up share be done on above points and capital of not less than such amount, further where any of the or transactions not exceeding such following sub points is “YES” sums, as may be prescribed, shall be SPECIAL RESOLUTION is entered into except with the prior required for entering contract approval of the company by a special /arrangement with related party resolution (in of the Draft Rules) :Text of the Draft Rules

(1)

For the purposes of first proviso to sub-section (1) of section 188,

(i)

a company having a paid-up share capital of rupees one crore or more shall not enter into a contract or arrangement with any related party; or

(i) company has a paid-up share capital of rupees 1 crore or more

(ii)

a company shall not enter into a transaction or transactions, where the transaction or transactions to be entered into:

(ii) where the transaction or transaction(s) individually or taken together with previous transactions during a financial year:

(a)

individually or taken together with previous transactions during a financial year, exceeds five percent of the annual turnover or twenty percent of the net worth of the company as per the last audited financial statements of the company, whichever is higher, for contracts or arrangements as mentioned in clauses (a) to (e) of sub-section (1) of section 188; or

a. exceeds 5% of the annual turnover. OR b. 20% percent of the net worth of the company as per the last audited financial statements of the company; whichever higher

is

YES

Second Proviso to section 188(1)

Section 188(2)

Section 188(3)

(b)

relates to appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding one lakh rupees as mentioned in clause (f) of sub-section (1) of section 188; or

(c)

is for a remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding ten lakh rupees as mentioned in clause (g) of sub-section (1) of section 188;

Provided further that no member of the company shall vote on such special resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party:

NO

(iii) Related party is appointed to any office or place of profit in the company its subsidiary/associate at a monthly remuneration exceeding 1 lakh rupees (iv) Remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding 10 lakh rupees

A Shareholder who is a related party is not allowed to vote on such special resolution For the purposes of second proviso to subsection (1) of section 188, in case of wholly owned subsidiary, the special resolution ed by the holding company shall be sufficient for the purpose of entering into the transactions between wholly owned subsidiary and holding company.

Every contract or arrangement Contract / arrangement mentioned in entered into under sub-section (1) 188(1) should be referred in Board’s shall be referred to in the Board’s Report along with its justification. report to the shareholders along with the justification for entering into such contract or arrangement. Contract/ arrangement entered into by Where any contract or arrangement is director/employee of the company entered into by a director or any should be approved by the Board/ other employee, without obtaining the shareholders as the case may be or consent of the Board or approval by a

special resolution in the general meeting under sub-section (1) and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such contract or arrangement was entered into, such contract or arrangement shall be voidable at the option of the Board and if the contract or arrangement is with a related party to any director, or is authorised by any other director, the directors concerned shall indemnify the company against any loss incurred by it. Section 188(4)

Section 188(5)

Without prejudice to anything contained in sub-section (3), it shall be open to the company to proceed against a director or any other employee who had entered into such contract or arrangement in contravention of the provisions of this section for recovery of any loss sustained by it as a result of such contract or arrangement.

should be ratified by the Board/ shareholders within three months from the date of contract/ arrangement. Otherwise such contract/ arrangement is voidable at the option of Board and if entered with related party to any director/ authorised by any other director, the concerned director shall indemnify the loss to the company.

Penal Provisions:Company may recover any losses incurred by the Company from the director or any other employee who had entered into the contract/arrangement in contravention of the provisions of this section. (Where the Company has avoided the Contract/arrangement which was voidable)

Any director or any other employee of a company, who had entered into or authorised the contract or arrangement in violation of the provisions of this section shall, (i)

in case of listed company, Imprisonment upto 1 yr or fine between be punishable with Rs. 25000 and Rs. 500,000 or with both imprisonment for a term in case of listed companies which may extend to one year or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both; and

(ii)

in case of any other Fine between Rs. 25000 and company, be punishable Rs. 500,000 in case of unlisted with fine which shall not be companies less than twenty-five thousand rupees but which may extend to five lakh rupees.

PLEASE NOTE THAT PROHIBITIONS ARE ABSOLUTE AND NO RATIFICATION OR APPROVAL OF CENTRAL GOVERNMENT IS PERMITTED. Date : 30th December, 2013