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    Question

    ABC Ltd. enters into a contract with a directorโ€™s

    relative for supply of raw material worth Rs. 1.2 crore. Paid-up share capital is Rs. 5 crore. As per Companies Act 2013, what compliance is required?
    A No compliance, transaction is valid. Correct Answer Incorrect Answer
    B Must be approved by shareholders through special resolution. Correct Answer Incorrect Answer
    C Board approval is sufficient. Correct Answer Incorrect Answer
    D Must be reported only in financial statements. Correct Answer Incorrect Answer
    E Must be approved by independent directors only. Correct Answer Incorrect Answer

    Solution

    Related Party Transactions beyond certain thresholds (10% of turnover or Rs. 1 crore) require shareholder approval via special resolution.

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