The Ministry of Corporate Affairs has vide its gazetted order dated 9th July 2014 amended the definition of related party as it appears in the Companies Act, 2013.
Section 2(76)(v) hitherto stated as follows;
(v) 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;
this has been changed to
(v) 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;
so what it implies is that the director or manager should fulfill both conditions i.e. directorship as well as shareholding in a public company to be considered as a related party.
Section 2(76)(v) hitherto stated as follows;
(v) 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;
this has been changed to
(v) 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;
so what it implies is that the director or manager should fulfill both conditions i.e. directorship as well as shareholding in a public company to be considered as a related party.
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