Comparison of Definition of Relative between Companies Act, 2013, Companies Act, 1956 and Accounting Standard 18 (AS-18)

Table showing comparison of ‘Relative’ Definitions under Companies Act,1956, Companies Act,2013 and Accounting Standard -18 (AS-18).

Particulars	Companies Act,1956	Companies Act,2013	Accounting Standard 18 (AS-18)
Defined Under	Defined under Section 2(41) and Section 6 and Schedule IA of the Act	Defined under Section 2(77) and draft rules notified on 09.09.2013 with reference to Section 2(77) (iii))	Defined in Para 10.9 under Definitions.
List of Relatives	Schedule IA List of Relative 1. Father 2. Mother (including step-mother) 3. Son (including step-son) 4. Son’s wife 5. Daughter (including step-daughter) 6. Father’s father 7. Father’s mother 8. Mother’s mother 9. Mother’s father 10. Son’s son 11. Son’s son’s wife 12. Son’s daughter 13. Son’s daughter’s husband 14. Daughter’s husband 15. Daughter’s son 16. Daughter’s son’s wife 17. Daughter’s daughter 18. Daughter’s daughter’s husband 19. Brother (including step-brother) 20. Brother’s wife 21. Sister (including step sister) 22. Sister’s husband	For the purposes of sub-clause (iii) of sub-section (77) of section 2, a person shall be deemed to be the relative of another, if he or she is related to another in the following manner: (1) Spouse (2) Father (including step-father) (3) Father’s father (4) Father’s mother (5) Mother ( including step-mother) (6) Mother’s mother (7) Mother’s father (8) Son ( including step-son) (9) Son’s wife (10) Son’s son (11) Son’s daughter (12) Daughter (including step-daughter) (13) Daughter’s husband (14) Brother ( including step-brother) (15) Sister (including step-sister)	Relative – in relation to an individual, means the 1.spouse 2.son 3.daughter 4.brother 5.sister 6.father and 7.mother who may be expected to influence, or be influenced by, that individual in his/her dealings with the reporting enterprise.
Who are Excluded		1. Son’s son’s wife 2.Son’s daughter’s husband 3.Daughter’s son 4.Daughter’s son’s wife 5.Daughter’s daughter 6.Daughter’s daughter’s husband 7.Brother’s wife 8.Sister’s husband

The Current definition under the new act has reduced the number of relatives to a minimum number.  The term “Spouse” has been additionally included in the definition in the Companies Act,2013, which was not earlier mentioned in the list of relatives in the Schedule IA of the Companies Act,1956.

From the Angle of Accounting Standard:

The term “Relatives” are included in the para 3(c ) and (d) of the Accounting Standard-18 with reference to “Related Party Transactions”

c) individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual;

d) key management personnel and relatives of such personnel;

From the Angle of Companies Act,2013:

The term “Relatives” have been made wider to include many persons inside the ambit of “Related Party Transactions”. Under Sec 2(76) “Related Party” with reference to a company means-

(i)      a director or his relative;

(ii)    a key managerial personnel or his relative;

(iii)   a firm, in which a director, manager or his relative is a partner;

(iv)  a public company in which a director or manager is a director or holds along with his relatives, more than two per cent of its paid-up share capital;

(ix) a director or key managerial personnel of the holding, subsidiary or associate company of such company or his relative; (as per draft rules notified by MCA on 09.09.2013).

Thanks
CS Nikhil Kalra
csnikhilkalra@gmail.com