A Closer Look at Related Party Transactions under the SEBI(LODR) Regulations, 2015

Related Party Transactions are deals between company and persons or entities which are related to the company or any of its promoters or managerial personnels. These transactions seem like any other transaction in an ordinary course of business, but they pose inherent risks of conflict of interest. Such transactions can lead to be advantageous to the company or its promoters while allowing potential exploitation of minor shareholders in the company. They pose a threat not only to the companies, the market they deal in but also to corporate governance. This article delves into the key provisions regulating and governing related party transactions as per SEBI (LODR) Regulations, 2015. It discusses the regulatory framework, approval processes and disclosure requirements. Such transactions will always demand constructive criticism in the scenario wherein the promoter ownership is usual. It is observed that the regulatory structure is comprehensive and evolving, yet practical refinement is required. This article has highlighted the importance of an integrated approach in aligning regulatory framework with corporate governance.