Redrawing The Regulatory Dimensions Of Related Party Transactions In India: Taking A Cue From Adani-

Redrawing The Regulatory Dimensions Of Related Party Transactions In India: Taking A Cue From Adani-Hindenburg Row

Shubham Kataruka, LLM, Corporate and Financial Law (2022-23), Jindal Global Law School, OP Jindal Global University

ABSTRACT

Related party transactions (RPTs)1 have been a significant issue of corporate governance in India, with several cases of abuse by insiders. There have been many events in the recent past which have brought the issue of regulation of related party transactions to the forefront. For example, the most recent Adani- Hindenburg row alleged that the Adani Group had inflated its profits by engaging in RPTs. This paper aims to analyze the regulatory framework around RPTs in India and suggest reforms to prevent abuse of related party transactions. The paper begins by analyzing the concept of related party transactions and their importance in corporate governance. It then examines the current regulatory framework around RPTs in India and identifies gaps in the regulations that may be exploited by insiders. Using the Adani-Hindenburg case as an example, the paper highlights the challenges in enforcing the existing regulations. The paper then proposes reforms to strengthen the regulatory framework around RPTs in India. These include the adoption of a more comprehensive definition of related parties and the establishment of an independent regulator to oversee RPTs and ensure compliance with the regulations. The proposed reforms aim to prevent abuse of related party transactions in India and enhance transparency and accountability in corporate governance. The paper concludes by emphasizing the need for a more robust regulatory framework to address the issue of related party transactions effectively.

Keywords: Related Party Transactions, Corporate Governance, Regulatory Framework, India, Reforms, Adani-Hindenburg Case, Transparency, Accountability