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Microlesson · 5-min read

Relative [Sec 2(77)]

# Relative — Section 2(77)

A 'Relative' in relation to a person means anyone falling under any of:

## Statutory tests

1. They are members of a Hindu Undivided Family (HUF); OR

2. They are husband and wife; OR

3. One person is related to the other in the prescribed manner (the closed list below).

## The closed list (Rule under Companies (Specification of Definitions Details) Rules, 2014)

A person is a 'relative' of another only if related in any of the following ways (each entry includes the step- version):

Father / Step-fatherMother / Step-motherSon / Step-sonSon's wife
Daughter / Step-daughterDaughter's husbandBrother / Step-brotherSister / Step-sister

That's the entire list. Anyone outside it is NOT a relative for Companies Act purposes — even if they are family in common parlance.

## Notably EXCLUDED

  • Grandfather / grandmother — not relatives.
  • Grandson / granddaughter — not relatives.
  • Uncle, aunt, cousin, nephew, niece — not relatives.
  • Brother-in-law, sister-in-law, son-in-law (other than daughter's husband listed) — generally not relatives.

## Why this matters across the Act

The term 'relative' lights up multiple provisions:

  • Section 2(76) Related Party — includes director's relative, KMP's relative.
  • Section 184 / 188 — disclosure and approval of related-party transactions.
  • Section 185 — loans to relatives of directors.
  • Section 192 — restrictions on non-cash transactions involving relatives.

A person being labelled a 'relative' or not can determine whether a transaction triggers heavy compliance.

## Memory aid

Think of it as 'parents, kids, siblings, and immediate spouses-of-kids' — plus step-relatives and the legal spouse. Anything beyond that one generation up/down/laterally is OUT.

Worked example

### Example 1

Example 1 — Grandson. Director D's grandson holds shares in a private company XYZ. Is XYZ a related party of D's company? Grandson is NOT a relative under Sec 2(77), so no related-party relationship arises through him.

### Example 2

Example 2 — Step-relations. D's stepmother is a partner in a firm. Is the firm a related party of D's company? Stepmother IS a relative (included in 'Mother (including step-mother)'). The firm becomes a related party of the company under Sec 2(76)(iii).

⚠️ Common exam mistakes

  • Treating all relatives in the social/cultural sense as 'relatives' under the Act. The statutory list is closed and short.
  • Forgetting that grandchildren and grandparents are NOT relatives under the Companies Act (in contrast to common usage).
  • Missing the inclusion of step-relations — these ARE within the definition.
  • Confusing the Companies Act definition of relative with the Income-tax Act definition (which is wider for some purposes).
Bare-Act text Section 2(77) · Companies Act, 2013 · click to expand
Relative, with reference to any person, means anyone 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. As prescribed under the Companies (Specification of Definitions Details) Rules, 2014, the list comprises: Father (including step-father); Mother (including step-mother); Son (including step-son); Son's wife; Daughter (including step-daughter); Daughter's husband; Brother (including step-brother); Sister (including step-sister).
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