Greenstone Cements Ltd. is an unlisted company (the company). The company achieved the turnover of ₹300 crore during the year 2024-25. Malavika, the CFO of the company has put forward the following case scenarios for you

Section 188 of the Companies Act 2013 deals with related party transactions. As per section 2(76) of the Companies Act, 2013 related party with reference to a company includes any company which is holding, subsidiary or associate company of such company. According to section 188, except with consent of the Board of directors given by a resolution at a meeting of the board and subject to such conditions as prescribed under rule 15(1) of the Companies (Meeting of Board & its Powers) Rules, 2014, no company shall enter into any contract or arrangement with a related party with respect to such transaction where there is a related party's appointment to any office or place of profit in the company, its subsidiary or associate company. Appointment of Anil: In the given case Anil, a director of Ruby Cements Ltd., which is a subsidiary of Greenstone Cements Ltd. was appointed as a general manager on the salary of ₹180,000 per month. Accordingly, related party's appointment i.e. of Anil to an office or place of profit in Greenstone Cements Ltd. will not require approval of members in general meeting as the monthly remuneration is not exceeding ₹250,000. Such transactions as to a related party's appointment to any office or place of profit in the company, its subsidiary company or associate company shall require consent of the board of directors given by a resolution at a meeting of the board. Hence, the approval of the board for the appointment of Anil is necessary and appointment in general meeting is not required. The effect on continuation of Kamal in the employment due to appointment of Parimal as a director As per section 2(76) of the Companies Act, 2013 related party with reference to a company includes a director or his relative. So, Parimal appointed as a director of Greenstone Ltd. on 1st July, 2025 is a relative of Kamal who was appointed as assistant production manager by the managing director in Greenstone Ltd. on the same day. This falls within the purview of section 188 of the Companies Act, 2013 which relates to the related party transaction with related party. Yes, continuation of Kamal as production manager will lead to conflict of interest and will affect the continuation unless approved / ratified by the Board under section 188(3).