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The question is regarding definition of Related Party u/s 2(76). ABC Pvt Ltd is holding 33% shares in XYZ Pvt Ltd. Besides substantial share holding, there are two common directors on the board of both these pvt companies. Therefore, (1) whether both these Pvt companies will fall under the Related Party definition as per sub-clause (iv) of Section 2(76) ? (2) As per the latest exemption notification, sub-clause (viii) of Section 2(76) will not be applicable to Pvt Companies for the purpose of Section 188. So, if both these pvt companies are exempted by virtue of sub-clause (viii) from Section 188, whether these pvt companies will continue to be exempted evenif they are covered by sub-clause (iv) of Section 2(76), which is not exempted for applicability of Section 188. In nutshell, whether sub-clause (iv) and Sub-Clause (viii) of Section 2(76) shall be applied separately while deciding applicability of Sec 188 to Pvt Companies or sub-clause (viii) supersede sub clause (iv) while deciding the applicability of section 188 to Pvt companies. Thank you in advance,

Section 2 - Definitions

Posted By: Dharmesh 9 year(s) ago

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    Anupama

1. XYZ Pvt Ltd is associate company of ABC Pvt Ltd in lieu of its holding of 33% shares. 2. ABC Pvt Ltd is not associate of XYZ Pvt Ltd. 3. Any RPT between the two companies, ABC can avail the exemption. However, XYZ has to pass necessary resolutions u/s 188. 4. Sub-clause (iv) of sec.2(76) need not be applied since the exemption notification exempts associate companies from the definition of related party. Other views are invited.

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