Companies Act 2013- Clarification on definition of term 'related party'

Order proposed to be issued under section 470 of the Companies Act, 2013

MINISTRY OF CORPORATE AFFAIRS

ORDER

New Delhi, the , 2014

S.O. _____ (E) Whereas the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said Act) received the assent of the President on 29th August, 2013 and section 1 thereof came into force on the same date;

And whereas clause (76) of section 2 of the Act define the term `related party’ has commenced on 12th September, 2013.

And whereas in sub-clause (v) of clause (76) provides for that a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid up share capital shall be related party.

And whereas difficulties have arisen regarding compliance with the provision.

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order to remove the above said difficulties, namely :-

1. Short title and commencement .-

(1) This Order may be called the Companies 1st (Removal of Difficulties) Order, 2014.

(2) It shall come into force on the date of its publication in the Official Gazette.

2. It is hereby clarified that a public company in which a director or manager is a director and holds along with his relatives, more than two per cent. of its paid up share capital shall be related party.