Ironing Out Differences on Related Party Transactions (RPTs) between Companies Act and SEBI Regulations: A Note

The Related Party Transaction (RPT) is a powerful legal mechanism to promote corporate transparency and accountability in business financial transactions. However, the RPT law as given in Section 188 of the Companies Act, 2013 is coming in direct inconsistency with the RPTs Regulations framed by SEBI for Listed companies. As a result, the listed companies are facing dilemma as to how to comply with both MCA Regulations as well as SEBI Regulations. Due to the critical importance of RPTs, the need arise is to iron out these inconsistencies as soon as possible. Thankfully, the Government has taken a call on the matter and it is working towards to make both the RPT Rules under Companies Act, 2013 and the SEBI Relevant Regulations consistent with each other. Earlier, the listed companies in India were facing the dilemma due to inconsistencies as to whether to comply with the RPTs regulations under Companies Act or to comply with the SEBI Regulations. The matter assumes importance because not adhering to RPTs may have serious consequence for the companies in India. The Regulators takes any violation of RPTs very seriously.

Dr. Amit Bhaskar, Associate Professor, Unitedworld School of Law (UWSL)

Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.

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