As per 2(76) of Companies Act:
a. a director or his relative;
b. a key managerial personnel or his relative;
c. a firm, in which a director, manager or his relative is a partner;
d. a private company in which a director or manager or his relative is a member or director;
e. a public company in which a director or manager is a director or and holds along with his relatives, more than two per cent of its paid-up share capital;
f. 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;
g. any person on whose advice, directions or instructions a director or manager is accustomed to act:
Provided nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity.
(viii) any body corporate which is
a. a holding, subsidiary or an associate company of such company,
b. a subsidiary of a holding company to which it is also a subsidiary: or
c. an investment company or the the venturer of the company.
(ix) such other person as may be prescribed.
As per IND AS 24
A related party’s (i) a person or (ii) an entity that is related to the reporting entity. [A reporting entity in this Standard is an entity that is preparing its financial statements.]
i. A person or a close member of that person’s family is related to a reporting entity if
that person:
(a) has control or joint control over the reporting entity;
(b) has significant influence over the reporting entity; or
(c) is a member of the key management personnel of
• the reporting entity or
• a parent of the reporting entity
ii. An entity is related to a reporting entity if any of the following conditions apply:
(a) The entity and the reporting entity are members of the same group (which means that
each parent, subsidiary and fellow subsidiary is related to the others).
(b) One entity is an associate or joint venture of the other entity (or an associate or joint
venture of a member of a group of which the other entity is a member).
(c) Both entities are joint ventures of the same third party.
(d) One entity is a joint venture of a third entity and the other entity is an associate of the
third entity.
(e) The entity is a post-employment benefit plan for the benefit of employees of either the
reporting entity or an entity related to the reporting entity. If the reporting entity is itself
such a plan, the sponsoring employers are also related to the reporting entity.
(f) The entity is controlled or jointly controlled by a person identified in (i) above.
(g) A person identified in (i)(a) above has significant influence over the entity or is a
member of the key management personnel of the entity (or of a parent of the entity).
(h) The entity, or any member of a group of which it is a part, provides key management
personnel services to the reporting entity or to the parent of the reporting entity.
As per Section 2(41) of Income Tax Act, 1961
unless the context otherwise requires, the term “relative”, in relation to an individual, means the husband, wife, brother or sister or any lineal ascendant or descendant of that individual.
Furthermore, for the purpose of exempting certain gifts received from relatives under Section 56(2)(v), the term “relative” has been defined in the Explanation to the said clause to include:
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the person referred to in clauses (ii) to (vi).
Summing up, the related parties for the company shall be the directors themselves and their relatives such as the spouse, father, stepfather, mother, stepmother, son, son’s wife, stepson , daughter, stepdaughter , brother, stepbrother , sister, stepsister , daughter’s husband etc.
Related persons are defined u/s 2(84) of the GST Act.
Persons shall be deemed to related if they fall under any of the categories below:
a) Officer or director of one business is the officer/director of another business
b) Businesses legally recognised as partners
c) An employer and an employee
d) Any person who holds at least 25% of shares in another company , either directly or indirectly
e) One of them controls the other directly or indirectly f) They are under common control or management
g) The entities together control another entity
h) The promoters or managerial persons are members of the same family
