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Under section 2(76) of the Companies Act, 2013, who falls outside the definition of a related party on…

Section 2(76)(iii) of the Companies Act, 2013 includes the specified partnership firm, and section 2(76)(iv) includes the specified private company. Under section…

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Under section 2(76) of the Companies Act, 2013, who falls outside the definition of a related party on the stated facts?

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Answer and explanation

Correct answer C

Section 2(76)(iii) of the Companies Act, 2013 includes the specified partnership firm, and section 2(76)(iv) includes the specified private company. Under section 2(76)(vii), a person whose directions a director or manager is accustomed to follow is a related party. The proviso to subclauses (vi) and (vii) excludes advice, directions and instructions given in a professional capacity.

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Option A

Section 2(76)(iii) includes a firm with the stated partnership connection.

Option B

Section 2(76)(iv) includes a private company with the stated membership or directorship connection.

Option C

The proviso to section 2(76)(vi) and (vii) excludes professional advice. The facts supply no other related-party connection.

Option D

Section 2(76)(vii) includes a person whose non-professional directions a director or manager is accustomed to follow.

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