Company · Ownership
We're transacting with a founder's other company — is that a 'related party transaction'?
The short answer
A transaction with a founder's other company is a related party transaction under section 188 of the Companies Act 2013. Ordinary-course, arm's-length RPTs skip section 188 approval but still get disclosed in AOC-2, annexed to the board's report. Material RPTs need board (and, past thresholds, shareholder) approval with interested directors sitting out the vote — and where a resolution is of a filing-required kind, MGT-14 follows within 30 days.
What gets filed with MCA
The paperwork nobody tells you about
Statutory formats that never touch the MCA portal — but an ROC inspection or due diligence will ask for every one of them.
Directors' standing disclosure of interest that makes RPTs detectable
Section 184(1), Companies Act 2013
Register of contracts and arrangements in which directors are interested
Section 189, Companies Act 2013
The sequence
- 1Identify whether the counterparty is a related party and whether the transaction is ordinary-course and arm's length
- 2Obtain Section 188 approval where required — board or shareholder resolution depending on the transaction
- 3File MGT-14 within 30 days of passing the resolution under Section 117
- 4Ensure interested directors disclose via MBP-1 and sit out the vote; maintain the MBP-4 register under Section 189
- 5Disclose all RPTs in AOC-2 filed as an attachment to AOC-4 within 30 days of the AGM
Do it with us — or check it yourself first
Questions founders actually ask
Do ordinary-course transactions with a founder's company need approval?
Ordinary-course, arm's-length related party transactions skip Section 188 approval but still must be disclosed. Interested directors must disclose their interest via MBP-1 and sit out the vote.
Where do we disclose related party transactions?
Disclose in AOC-2, annexed to the board's report that travels with the AOC-4 filing, under section 134(3)(h) read with section 188(2).
What registers do we maintain for RPT compliance?
Directors file MBP-1 as a standing disclosure of interest under Section 184(1). The company maintains the MBP-4 register of contracts and arrangements in which directors are interested under Section 189.
Last verified 2026-08-24 against MCA V3 records and ICSI reference material. Form-level deadlines and penalties live on the linked form pages and update there.