Meaning of Relative under the Companies Act, 2013
Before we get to know what ‘Relative(s)’ mean under the Companies Act, 2013 and who are the persons who will be considered as Relatives, one may wonder 'why do we need to know at the first place as to who are the Relatives under the Companies Act, 2013?'.
It is because of the simple reason that there are many references under the Companies Act, 2013 and other applicable acts made for Indian Companies, wherein restrictions/limitation are put for relatives of any members/directors/key managerial persons/officers etc. of a Company, and therefore it is important to know the criteria of all those persons who are covered under the definition of 'Relative'.
Definition of ‘Relative’
Sub-Section (77) of Section 2 of the Companies Act 2013 defines "Relatives" as under:
"Relative" means, with reference to any person, means any one who is related to another, if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;
Further, as per rule 4 of the Companies (Specification of definitions details) Rules, 2014, a person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-
Provided that the term “Father” includes step-father.
Provided that the term “Mother” includes the step-mother.
Provided that the term “Son” includes the step-son.
(4) Son’s wife.
(6) Daughter’s husband.
Provided that the term “Brother” includes the step-brother;
Provided that the term “Sister” includes the step-sister.
Meaning of Relative under the erstwhile Companies Act, 1956
As compared to the present Companies Act 2013, the list of relatives under the old Companies Act 1956, was rather quite long.
List of relatives as per companies act 1956 (no more applicable)
2. Mother (including step-mother).
3. Son (including step-son).
4. Son's wife.
5. Daughter (including step-daughter).
6. Father's father.
7. Father's mother.
8. Mother's mother.
9. Mother's father.
10. Son's son.
11. Son's son's wife.
12. Son's daughter.
13. Son's daughter's husband.
14. Daughter's husband.
15. Daughter's son.
16. Daughter's son's wife.
17. Daughter's daughter.
18. Daughter's daughter's husband.
19. Brother (including step-brothers).
20. Brother's wife.
21. Sister (including step-sister).
22. Sister's husband.
Situations where reverse relationship might not result in being a Relative of the Other Party:
(this is an illustration of scenarios under the old Act - under the new Act these relatives criterias are no more applicable)
Example (1):- Let, Ms. M is the wife of Mr. S, the Director of ABC Limited and Mr. A is the Brother of Ms. M. As per the above exclusive list, Wife’s Brother (brother-in-law) is not a criteria to be considered as a Relative. And therefore Mr. A is not the relative of Mr. S.
But if we think it in a reverse way, then Mr. S will be considered as a Relative of Mr. A as per the above list. Why? Because Mr. S is the Sister’s Husband for Mr. A.
Example (2):- Let, Ms. M is the daughter of Mr. H, the Director of DEF Limited and Mr. S is the Husband of Ms. M. As per the above exclusive list, Daughter's husband is a criteria for being considered as a Relative. And therefore Mr. S is a relative of Mr. H.
But if we again think it in a reverse way, then Mr. H will not be considered as a Relative of Mr. S as per the above list. Why? Because Mr. H is the Wife’s Father (father-in-law) for Mr. S.
Page last updated: 31st October 2016