As per Companies Act 2013, a related party transaction

Solution

Section 188 of the Companies Act deal with the Related Party Transactions. Except with the consent of the Board of Directors  given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party  Provided that no contract or arrangement, in the case of a company having a paid-up share capital  of not less than such amount, or transactions not exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a resolution: Note – In November 2025, SEBI introduced threshold based Framework to Determine Materiality of Related Party Transactions based on the annual consolidated turnover of the listed entity. • Under the new norms, entities with turnover up to ₹20,000 crore, a transaction will be considered material if it exceeds 10% of the annual consolidated turnover • In the case of entities with turnover between ₹20,001 crore and ₹40,000 crore, the threshold would be ₹2,000 crore plus 5% of the turnover exceeding ₹20,000 crore. • For entities with turnover exceeding ₹40,000 crore, the threshold will be ₹3,000 crore plus 2.5% of the turnover exceeding ₹40,000 crore, or ₹5,000 crore, whichever is lower. • In order to protect the interests of minority shareholders, an absolute threshold of ₹5,000 crore as an upper ceiling has been notified for listed entities having a turnover above ₹40,000 crore.