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In the battle for good governance, India Inc. keeps tripping on three alphabets– RPT. Related-Party Transactions. This, despite the fact that India has one of the most elaborate and prescriptive set of rules and regulations for disclosures and approval of RPT by both listed and unlisted companies.
The Ministry of Corporate Affairs (MCA) regulates transactions between two unlisted companies, while SEBI looks at transactions when at least one of the parties to the transaction is a listed entity or its subsidiary. Listed companies are required to follow much stricter rules because public money is at play.
A balance between ease of doing business and protection of stakeholder interest from abusive RPTs remain the main concern of the regulators.
The entire regime was substantially overhauled from April 2022 and April 2023 with fundamental changes in the definitions of “related party”, “related party transactions” and approval regime under Regime under Reg 23 of SEBI LODR.
The latest changes to LODR notified on 12th December, 2024 has further amended the regulations
