Mr Pro provides tax related advice to the Board of A Ltd which a company with turnover of 5 cro...........

Companies Act-Phase (I & II) Board-powersandMeetings

Mr. Pro provides tax related advice to the Board of A Ltd which a company with turnover of 5 crores. He does practice also as a Tax consultant. A transaction of leasing of property is sought to be undertaken by the Company with Mr Pro for 1 crore. The Board wants this to be approved by the Company as Mr. Pro is a related party in their estimation. Is the treatment valid?

Yes Mr. Pro is a related party as the BOD is accustomed to Act on his directions

No, Mr. Pro is not a related party as the fields of Tax consultancy and land leasing are not the same even though the BOD acts on his directions

Yes, Mr.Pro is a related party as Tax consulting can be associated with land leasing as ways to evade tax

No, Mr. Pro is a professional and as such not covered under Companies Act as related person on whose orders the BOD acts, since he does so in professional capacity

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Explanation:

Identification of Related Parties as per Companies Act.

section 2(76) of the Companies Act, 2013).

related party”, with reference to a company, means—

(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;.