Companies Act Section 2(77) Relative

Relative Section 2 (77)

A Relative, concerning any person, means:

1. Members of the Hindu Undivided Family (HUF):

For an individual, relative includes his or her spouse, father, mother (including step-mother), son, son's wife, daughter, daughter's husband, brother, sister, and any other person who is related to him or her by blood or marriage or adoption.

2. Relationship by Marriage or Adoption:

Relatives also include relationships by marriage or adoption. 

This means individuals related to a person through the spouse's family or through the legal process of adoption are considered relatives.

Importance:

Related Party Transactions: 

Understanding who qualifies as a relative is crucial for identifying related parties under the Companies Act, particularly for disclosure requirements in related party transactions.  

Corporate Governance: 

Recognizing relatives helps maintain transparency and prevent conflicts of interest in corporate dealings, ensuring fair practices and protection of shareholder interests.

Compliance: 

Companies must adhere to disclosure norms for transactions involving relatives to comply with regulatory standards and promote good corporate governance.

Example:

If Mr. X is a director of a company, his relative includes his spouse, children, parents, siblings, and other relatives as defined under the Companies Act, 2013. 

Transactions or dealings involving any of these individuals would typically be subject to disclosure requirements to avoid conflicts of interest and ensure transparency.