Related Party Transactions (RPTs) are among the most scrutinized areas under corporate law, audit and taxation. Improper handling can lead to penalties, disallowances, audit qualifications and even allegations of fraud or diversion of funds.
This guide provides a complete analysis of RPTs under the Companies Act including definitions, approval requirements, disclosures, thresholds, penalties and strategic compliance.
Auditors & regulators focus heavily
Board + Shareholder approvals
Penalties + disallowances
| Category | Examples |
|---|---|
| Directors | Director & relatives |
| Entities | Holding / Subsidiary |
| Associates | Joint ventures |
| Level | Requirement |
|---|---|
| Board | Mandatory |
| Shareholders | For thresholds |
| Audit Committee | Listed companies |
| Transaction | Limit |
|---|---|
| Sale of goods | 10% turnover |
| Services | 10% turnover |
| Lease | 10% net worth |
ROC Filing Guide
Compliance Checklist
RPT compliance is critical for governance and audit. Proper structuring and documentation can significantly reduce litigation risks.
For professional assistance, consult a Corporate Compliance Advisor.
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