Free Consultation by Expert
Many thanks to Setbharatbiz. We had an excellent experience working with its expert. They have a strong sense of professionalism when dealing with clients.
Mudassir CEO, Twinfinty DigiTech SolutionsWe would recommend Setbharatbiz incorporation services to any founder without a second doubt. The process was beyond efficient and shows Setbharatbiz founder's vision
Nagasrinivas Director,Prakash Nagasrinivas & Saradhy AssociatesI was searching for a company for assistance in the incorporation services. Then one of my friend tell me about Setbharatbiz and definitely the Setbharatbiz is the best.
Prakash Kakani Director, PNS EV HubOverview
Disclosure of Related Party Transactions (RPT)
The Disclosure of Related Party Transactions (RPT) is a statutory requirement under the Companies Act, 2013, and other regulations such as SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This process involves reporting financial and operational dealings with related parties to ensure transparency, accountability, and the prevention of conflicts of interest.
Related Party Transactions are transactions undertaken between a company and its related parties, such as subsidiaries, directors, key managerial personnel (KMP), or their relatives. Disclosure of such transactions ensures that stakeholders and regulators are aware of the nature and extent of these dealings, reducing the risk of unfair practices or fraud.
Important
1. Transparency : Ensures that stakeholders are informed about transactions with related parties.
2. Compliance : Adheres to the Companies Act, 2013, and SEBI regulations.
3. Prevention of Conflicts : Safeguards against misuse of company resources by related parties.
4. Accountability : Promotes good corporate governance practices.
5. Avoids Penalties : Non-disclosure attracts fines and legal consequences.
Applicability
Disclosure of RPT applies to
1. Listed Companies : As per SEBI (LODR) Regulations, 2015.
2. Unlisted Public Companies : Covered under the Companies Act, 2013.
3. Private Companies : Subject to provisions of the Companies Act for specific transactions.
4. Transactions Exceeding Prescribed Limits : Transactions that exceed thresholds specified under Section 188 of the Companies Act.
Documents Required
Features
Features & Benefits of Disclosure of Related Party Transactions (RPT)
Detailed Disclosures
Approval Mechanism
Threshold-Based Requirements
Statutory Reporting
Disclosure of Related Party Transactions (RPT)
Conflict Mitigation
Audit Oversight
Penalty for Non-Compliance
Alignment with Accounting Standards
Regulatory Monitoring
Comparison with Related Services
| Feature | RPT Disclosure | Annual Financial Statements | Annual Return Filing |
|---|---|---|---|
| Objective | Report related transactions | Report financial performance | Report corporate structure |
| Scope | Related party dealings | Entire financial data | Shareholding and directors |
| Approval Mechanism | Yes | No | No |
| Regulatory Body | MCA, SEBI | MCA | MCA |
| Filing Requirement | Yes (Form AOC-4) | Yes | Yes |
| Disclosure Standard | Ind-AS 24 | Ind-AS | Companies Act, 2013 |
| Penalty for Non-Compliance | High | Moderate | High |
Frequently Asked Questions
Who is responsible for disclosing RPTs?
The board of directors is responsible for disclosing related party transactions in the financial statements and annual filings.
What is the penalty for non-disclosure of RPT?
Non-compliance may attract fines of up to ₹5,00,000 for the company and ₹25,000 for each officer in default.
Are RPT disclosures mandatory for private companies?
Yes, private companies must disclose RPTs if the transactions fall under Section 188 of the Companies Act, 2013.
What is the role of the Audit Committee in RPTs?
The Audit Committee reviews and approves all RPTs to ensure they are fair and comply with regulations.
How are RPTs disclosed in financial statements?
RPTs are disclosed in the notes to the financial statements under Ind-AS 24, detailing the nature, amount, and terms of the transactions.
Can related party transactions be done without shareholder approval?
Transactions below the specified thresholds can be approved by the board and audit committee without shareholder approval.