The Audit Committee is required to approve all related party transactions which are at arm’s length and in ordinary course of business shall be periodically disclosed to the Audit Committee/Board of Directors. However, in case, there are any transactions which are not at arm’s length or which are concluded to be not in ordinary course of business, the Company would need the following additional approvals as mentioned here under:
In case of transactions which are ‘material’ in nature and/or not in the ordinary course of business or not at arm’s length, the management shall present the following information to the Audit Committee/Board of Directors for approval of those Related Party Transactions as per the provisions of the Companies Act, 2013:
a. name of the related party and nature of relationship
b. the nature, duration of the contract and particulars of the contract or arrangement;
c. the material terms of the contract or arrangement including the value, if any;
d. any advance paid or received for the contract or arrangement including the value, if any;
e. the manner of determining the pricing and other commercial terms, both included as part of contract and not considered as of the contract;
f. whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors; and
g. any other information relevant or important for the Board to take a decision on the proposed transaction.
After reviewing such information, the members of the Audit Committee (without the participation of the interested Committee member(s), if any) shall approve or disapprove such transactions.
Notwithstanding the foregoing, the following Related Party Transactions shall not require approval of Audit Committee or shareholders:
i. Any transaction that involves paying of compensation to a Director or Key Managerial Personnel in connection with his or her duties to the Company or any of its subsidiaries or associates, including the reimbursement of reasonable business and travel expenses incurred in the ordinary course of business.
ii. Any transaction in which the Related Party’s interest arises solely from ownership of securities issued by Company and all holders of such securities receive benefits pro rata as the Related Party.