Template Description

This template is for disclosure of Related Party Transaction entered into by company, under the Companies Act 2013. It is a 3-page MS Word document. This form is mandatory for companies to report particulars of contracts or arrangements with related parties. The intended audience includes companies, corporate secretaries, legal professionals, and compliance officers.

Understanding Form AOC-2 – Disclosure of Related Party Transaction

Structure:

The form is divided into two main parts:

1. Details of contracts or arrangements or transactions not at arm's length basis
2. Details of material contracts or arrangement or transactions at arm's length basis

Part 1: Contracts Not at Arm's Length Basis

This section is designed to capture information about transactions that are not conducted at arm's length. The table in this section includes the following fields:

• Name(s) of the related party and nature of relationship
•  Nature of contracts/arrangements/transactions
•  Duration of the contracts/arrangements/transactions
• Salient terms of the contracts or arrangements or transactions including the value, if any
• Justification for entering into such contracts or arrangements or transactions
• Date(s) of approval by the Board
• Amount paid as advances, if any
• Date on which the special resolution was passed in general meeting as required under first proviso to section 188

This detailed breakdown allows for a comprehensive disclosure of transactions that may require additional scrutiny due to their nature.

Part 2: Material Contracts at Arm's Length Basis

This section focuses on material contracts or transactions that are conducted at arm's length. The table in this section includes the following fields:

• Name(s) of the related party and nature of relationship
• Nature of contracts/arrangements/transactions
• Duration of the contracts/arrangements/transactions
• Salient terms of the contracts or arrangements or transactions including the value, if any
• Date(s) of approval by the Board, if any
• Amount paid as advances, if any

This section provides transparency for significant transactions that, while conducted at arm's length, still require disclosure due to their materiality.

Signature Section:

The form includes a signature section at the bottom, which states "For and on behalf of Board of Directors of [NAME OF COMPANY]". It provides spaces for two directors to sign, including their names, designation as director, and Director Identification Number (DIN).

Conclusion

Form AOC-2 is a crucial document in the corporate governance framework of Indian companies. It provides a structured approach to disclosing related party transactions, ensuring that companies maintain transparency in their dealings with related entities. By requiring detailed information and appropriate approvals, it serves as a safeguard against potential conflicts of interest and helps maintain the integrity of corporate financial reporting.