Related-party transaction scanner
Ledger and related-party list in; each party's total against the section 188 thresholds, with AOC-2 rows ready to fill.
Checks a transaction ledger against a related-party list and flags every (party, nature) combination that crosses the section 188 / Rule 15(3) threshold for shareholder (members') approval by ordinary resolution. Board approval under section 188(1) is always needed for a related-party transaction, regardless of amount — the only escape is a transaction that is both in the ordinary course of business and at arm's length, which is exempt from section 188 entirely.
This tool does not, and cannot, decide what is "ordinary course" or "arm's length" — that is the Company Secretary's judgement. It flags every related-party transaction against the members'-approval thresholds; you apply the arm's-length exemption yourself.
Both figures must come from the audited financial statements of the preceding financial year, not the current year's provisional numbers — Rule 15(3) is explicit about this.
Transaction ledger
Party, date, amount, and a free-text nature — it is matched onto goods / services / property / leasing / office / underwriting by keyword.
Related-party list
One column: the names on your section 2(76) related-party list.
Matching is exact after trimming spaces and ignoring case — it will not catch near-miss spellings ("Mehta Holdings Pvt Ltd" vs "Mehta Holdings Private Limited"). Always check the unmatched-parties list below in case your related-party list is incomplete or a name is spelt differently.
IN SHORT
This free scanner takes a transaction ledger and a related-party list, totals each party's transactions for the year by nature (goods, services, property, leasing, office of profit, underwriting) and compares them with the Rule 15(3) thresholds above which section 188 needs members' approval. It flags what is over and drafts AOC-2 rows for you to complete.
STEP BY STEP
How it works
- Export the ledger with party, date, amount and nature of transaction, and list the related parties; templates are provided for both.
- Enter turnover and net worth from the last audited financial statements; nothing is judged until both are in. Each related party's total is then set against its threshold, with the rule cited.
- Decide which flagged transactions are in the ordinary course and at arm's length, complete the AOC-2 rows and download the working paper.
GOOD TO KNOW
Common questions
- What is the threshold for leasing?
- Ten per cent or more of turnover. Before the amendment of 18 November 2019 net worth also counted; it no longer does. Property is still tested against net worth.
- Does a transaction of exactly ten per cent need approval?
- Yes. Rule 15(3) says ten per cent or more for goods, services, property and leasing. Office of profit and underwriting are different: only above ₹2.5 lakh a month, or above 1% of net worth.
- What if the nature of a row is not recognised?
- The row is listed with a count and left out of the totals until you pick its nature. Descriptions such as sales, purchase, salary, remuneration or stipend are read automatically.
- Does it decide what is at arm's length?
- No. A transaction in the ordinary course of business and at arm's length is outside section 188, and that judgement is the company secretary's. The tool flags every total above a threshold and leaves the exemption to you.
- Why is office of profit tested by month?
- Rule 15(3) sets the limit at ₹2.5 lakh a month, so a party can be under it for the year and still be flagged for one month.
- What if a ledger party does not match the list?
- It is shown as unmatched, never dropped. Names match after trimming and ignoring case, so a misspelt name needs a look.