Over the years, Related Party Transactions (RPT) have become a key focus area for the board of directors, not only from a tax perspective but also to improve corporate governance. The frequency at which media reports have been published recently on instances of noncompliances or defaults with respect to RPT approval and disclosures has certainly rung an alarm to many listed entities in India. The regulator, the Securities and Exchange Board of India (SEBI), has also been very strict in imposing financial penalties and issuing stern warnings to the defaulters.
