Related Party

A related party is an entity or individual that has a pre-existing relationship with a company — through ownership, control, common management, or significant influence — that could affect the independence and arm's length nature of transactions between them. Under Indian Accounting Standards (Ind AS 24) and the Companies Act, 2013, related parties of a listed company include: the holding company and its subsidiaries, associate companies, joint ventures, key managerial personnel (KMPs — CEO, CFO, Managing Director, Company Secretary) and their close family members, entities in which KMPs or promoters hold significant voting power, and any entity exercising significant influence over the company. Related party relationships create the potential for transactions to be structured in ways that benefit controlling shareholders or management at the expense of minority shareholders — through non-market pricing, preferential terms, or value transfer. SEBI's LODR Regulations in India impose strict disclosure and shareholder approval requirements for material related party transactions — transactions above specified thresholds require audit committee review, board approval, and shareholder approval through special resolution, with related parties excluded from voting. For equity investors conducting due diligence on Indian listed companies, the related party disclosures in the notes to financial statements are among the most important sections for identifying potential governance risks and value leakage to controlling shareholders.