Abstract
Related party transactions can be legitimate and value-enhancing for a corporation, but they can also serve as a vehicle for illegitimate expropriation of corporate value by management or controlling shareholders. Related party transactions assume greater significance in a market context where there is high promoter ownership in group companies and a prevalence of listed companies under promoter-controlled groups. Abuses of related party transactions have been linked to negative consequences to minority investors in Indian companies, and have played a key part in some high-profile cases of corporate fraud. Currently, the Indian legal regime does not contain adequate safeguards for preventing abuse of related party transactions. This paper describes this problem in a comparative framework, examines disclosure regarding related party transactions contained in the annual reports of some of India's largest public companies, and makes several proposals for regulatory reform.
Recommended Citation
Galani, Ami and Rehn, Nathan
(2010)
"Related Party Transactions: Empowering Boards and Minority Shareholders to Prevent Abuses,"
National Law School of India Review: Vol. 22:
Iss.
2, Article 2.
Available at:
https://repository.nls.ac.in/nlsir/vol22/iss2/2
