Related company

Dear Sir,

the Gevt reject under the grounds of the both concerns that means the priviate ltd company and propreitory are associated, related company as per the policy of government no second proposal from associate / related / sister / same company. our query is whether this two pvt ltd and propreitory is associated, related.

Dear Mr. Sarvanan,

Please check the Accounting Standard "AS-18" which defines the related parties.  Definitely the entities under the control of relatives of the persons having control over the companies are related parties of the concerned company.  However, this is accounting treatment and disclosure only.  As it is not clear from your query as to what kind of application you made to Govt. and for what purpose and what were the considerations or guidelines in that regard by the Govt., no one will be able to help you unless he is aware of such details.

One has to look into the specifics of the case.But as a general rule..

For example, In a Government Tenders, two firms X and Y participate and :-

Case#1:- The MDs of X & Y are real brothers.

Case#2:- MDs of X & Y are real brothers but MD of X is a Director of Y or vice versa.

Case#3:-MDs of X & Y are the same but other Directors are different.

Case#4:- MDs of X & Y are not related but one of the Directors is common.

In the above scenario:-

> Case#1--Both the Firms are different and tenders from both the Firms will be considered.

>Case #2 ,3 &4- the firms will be treated as related and the Government has right to accept Tender from one Firm only to increase competition and to avoid cartelisation.