Related Party Transactions in Light of Recent Violations by Raymond Limited

Mehrush Chandhok
National Law University, Jodhpur, India

Volume III – Issue I, 2021

In 2019, a show-cause notice was given to textile manufacturer Raymond Ltd., which has been a trusted brand for many years, by the Securities and Exchange Board of India claiming several securities market breaches. Among several allegations, one that is the focus of this study is the failure on part of Raymond to obtain prior approvals from the auditing committee in respect of related party transactions and thereby violating provisions under c1ause 49 of listing agreement and SEBI (LODR) Regulations. Ultimately, the adjudicating officer fined the company a whooping 7 lakhs for the same. This paper intends to study and examine the Order issued by the officer on November, 19, 2020. For this purpose, the understanding of the term “Related Party Transactions” is crucial in order to fulfill the objective to identify the intention behind such decision passed. The study will be confined to and address Whether SEBI was correct to impose the fine on Raymond Limited for the alleged violations committed by it?, What are the reasons for the companies in India to resort to unethical practices on related party transactions?, Why are good practices followed by the companies in India to comply with the legal and regulatory framework?, and Does the current framework need any reforms or amendments for better corporate governance in the country? .


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