Dynamic Ltd. (paid-up share capital ₹25 Crore) proposes to enter into a contract with Sunil for the procurement of raw materials for an amount of ₹5 Crore during the financial year. Sunil is the step brother (father's se

Section 188(1)(a) prescribes that except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to the sale, purchase or supply or any goods or materials. Rule 15(1) of the Companies (Meeting of Board and its Powers) Rules, 2014 prescribes that the agenda of the Board meeting at which the resolution is proposed to be moved shall disclose: the name of the related party and nature of relationship; the nature, duration of the contract and particulars of the contract or arrangement; the material terms of the contract or arrangement including the value, if any; any advance paid or received for the contract or arrangement, if any; the manner of determining the pricing and other commercial terms, both included as part of the contract and not considered as part of the contract; whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rational for not considering those factors; and any other information relevant or important for the Board to take a decision on the proposed transaction. Rule 15(2) provides that where any director is interested in any contract or arrangement with a related party, such director shall not be present at the meeting during discussions on the subject matter of the resolution relating such contract or arrangement. Section 2(76) defines a related party to mean a director or his relative. Section 2(77) read with Rule 4 of the Companies (Specification of Definitions Details) Rules, 2014 provides that the term relative includes step-brother. In view of the above provisions, the transaction is a related party transaction as Anil's step-brother is a relative.