Close Relatives

Close relatives, in the context of Indian securities law and taxation, refers to a defined category of family members whose financial relationships, transactions, and beneficial interests are treated as connected or related for regulatory, disclosure, and tax purposes. Under the Companies Act, 2013, close relatives of a director or Key Managerial Personnel include: spouse, father, mother, son, son's wife, daughter, daughter's husband, brother, brother's wife, sister, sister's husband. Under SEBI's Insider Trading Regulations, the definition of connected persons extends to close relatives who may receive Unpublished Price Sensitive Information (UPSI) and are therefore subject to trading restrictions during designated window closure periods. For income tax purposes, close relatives include spouse, siblings, parents, and their spouses. Transactions with close relatives — loans, gifts, property transfers — often receive different tax treatment than arm's length transactions: gifts received from close relatives are not taxable (Section 56), while gifts from non-relatives above ₹50,000 are taxable as income. For SEBI's disclosure purposes, promoters must disclose transactions by close relatives in company shares as part of the insider trading compliance framework. In the context of nomination in Demat accounts and mutual fund folios, close relatives are typically the preferred nominees — ensuring smooth transfer of investment assets without going through the longer legal succession process.