OECD Report on Related Party Transactions in India

The topic of related party
transactions (RPTs) has acquired tremendous importance lately and has been the
subject matter of intense discussion and debate both on this Blog (here)
and elsewhere (here,
here
and here).
The discussions focus on the specifics and the interpretation of the Companies
Act and the Rules promulgated by the Ministry of Corporate Affairs (MCA) that deal
with RPTs.
In the meanwhile, the OECD has
issued a report entitled Improving
Corporate Governance in India: Related Party Transactions and Minority
Shareholders Protection
(h/t: Corporate
Law and Governance
). The OECD report studies the current state of the law
in India regulating RPTs, and makes some suggestions for reform. While the
report takes into account the enactment of the Companies Act, 2013 and the
reforms introduced thereunder, it does not deal with the nitty-gritties of the
issues relating to rule-making and practical implications on companies as
contained in the earlier mentioned literature. Nevertheless, it provides a
macro-level perspective on the more significant reforms required to rein in
RPTs given their prominence in the Indian context due to the presence of
corporate groups and concentrated shareholdings.
The macro-level policy matters
highlighted in the OECD report may help guide the resolution of some of the
more specific issues that have arises in the Companies Act and the MCA Rules on
RPTs.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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