Question

In a Private Company there are only 2 shareholders cum directors. A resolution is required to be passed pertaining to related party transaction. Which resolution should be passed?

• A. Ordinary
• B. Special
• C. Unanimous
• D. None

Answer 1

Answer: (C)

Unanimous

A related party is a party related to a body corporate/ company in any other way other than by the companies' own transactions. It means that a special relationship persists between the parties even before the transaction takes place. Section 2(76) of the Companies Act, 2013 ("the Act"), defines a related party with reference to a company, to mean:

• director or a key managerial person or their relatives or
• a firm, private company in which the partner, director/ manager or his relative is a partner or
• a private company or a public company in which a director or manager is a director and holds along with his relatives, more than 2% of its paid-up share capital.
• In case where there are two shareholders cum directors, the resolution regarding related party transaction has to be unanimous, i.e. both of them have to vote agreeing on the same thing.