Related-party trouble

Seeking shareholder approval would impede normal functioning

Listed companies could have practical issues in complying with one of the stipulations of the November 2021 circular of the Securities and Exchange Board of India, which comes into force on April 1. This concerns related-party transactions (RPTs) of listed companies. From the next fiscal year, RPTs must be reported in detail with justification for reviews by the audit committee, and the details must be shared with the stock exchanges. In addition, RPTs must also be approved by shareholders. Sharing this information in a detailed format, and in a timely fashion with the audit committee, may boost corporate governance, and