Related Party Transactions in Light of Recent Violations by Raymond Limited

I. Introduction: setting the context

The Raymond Group established in 1925, “is a majority interest holder in Textile and Apparel sectors and also has diversified presence in FMCG (Fast Moving Consumer Goods), Engineering, Cosmetics, Aviation and Prophylactics in national and international markets. The Company has earned itself the title of “The finest fabric in the world”, by creating an established dominance in textiles industry to being an aggressive player to the competitors through various reputed brands and innovative concepts of customized clothing under its sleeves.”²

After all the praise, the company is expected to be in good news but it has found itself in the debacle of public scrutiny with the occurrence of related party violations as stated by SEBI. Before coming to the discussion of the case, we shall first study what related party transactions are and how they are governed under the Indian laws.

A. Who can be considered as Related Party?

A list consisting of individuals and entities termed as related parties by law is provided herein. According to Section 2(76)³, “a company whether listed or unlisted may have the following persons or entities as related parties:

• A director or his relative
• A key managerial personnel or his relative
• Any director/manager/relative is a partner in another firm
• Any director/manager/relative is a director or member in another private firm
• A public company in which a director or manager is a director and owns more than 2 percent of its paid-up capital along with its relatives.
• Any direction/ instruction given by a director or manager to another body corporate’s board of director/managing director or manager to act in accordance with such advice
• Any direction/instruction given by a person on whose advice the director/manager is required to act
• A body corporate having any holding, subsidiary or associate company, a subsidiary of a holding company to which it is also a subsidiary, an investing company or the venturer of such company
• Any other person as may be prescribed by law.”⁴

Exception: Any advice, recommendation or direction provided to another organization or individual within this section in a professional capacity shall not be labeled as a related party.

In addition, Rule 3 of Companies (Specification of Definition Details) Rules, 2014, provides that “a director other than an independent director or key managerial personnel of the holding company or his relative with reference to a company shall also be deemed to be a related party.”⁵

Under Section 2(zb) of SEBI (Listing Obligations and Disclosure Requirements) 2015, the meaning of related party is same as under Companies Act, 2013. Although it also includes:

“any person or entity belonging to the promoter or promoter group of the listed entity and holding 20% or more of shareholding in the listed entity shall be deemed to be a related party”.⁶

B. Who can be called a Relative?

The term “Relative” has been defined under Rule 4 of Companies (Specification of Definition Details) Rules, 2014, to mean that “a person shall be related to another if he/she has the following relations with them, namely, Father (includes step-father), Mother (includes the step-mother), Son (includes the step-son), Son’s wife, Daughter, Daughter’s husband, Brother (includes the step-brother), Sister (includes the step-sister).”⁷

Under Section 2(77)⁸, “a relative of any person shall also include the members of Hindu Undivided Family or the relation between that of husband and wife.”⁹

C. What are Related Party Transactions?

Now that we have read what relatives and related parties mean, it is easier to define the term as transactions that a company may enter into with these respective related parties. When an already existing business relationship between two persons or entities takes place in an agreement, it is called related party transaction.

As per the definition under Section 2(zc) of SEBI (LODR), “related party transaction means a transfer of resources, services or obligations between a listed entity and a related party, regardless of whether a price is charged and a transaction with a related party shall be construed to include a single transaction or a group of transactions in a contract.”

For instance, Mr. A is the director of a company named ABC Ltd. and this company buys goods and services from another company named XYZ Pvt. Ltd. in which Mr. A is a partner. So, this transaction between these two companies shall be termed as related party transactions.

II. Regulation of related party transactions

“Undoubtedly, the objective of business transactions and business goals is to distribute and repatriate corporate capital to improve those who work for the organization. The bigger and stronger an organization becomes; the more society perceives it. Its penetration into the pockets of individuals is popular. A business's magnificence is directly proportional to its effect on the interests of its stakeholder group. Perhaps the slightest vested interest will cause adverse consequences on the society and stakeholders under certain circumstances.”¹⁰

One of the compliance initiatives is to control 'related party transactions,' which can result in numerous illegal practices in the company's operations if left unchecked or un-scrutinized.

A. Board of Directors’ Approval

These transactions are regulated under Section 188¹¹ that lays down that before a company can enter into any contract or transaction with a related party, it needs to pass a resolution at a meeting with the consent of the Board of Directors. “The following are the transactions which can be entered into:

• Sale, purchase or supply of any goods or materials
• Selling, leasing, buying or disposing of any property
• Rendering or availing any kind of services
• Appointment of any agent for purchase or sale of goods, materials, services or property
• Appointment of a related party to any office or place of profit in the company itself or in its subsidiary or associate company
• Underwriting the subscription of securities or derivatives of the company.”¹²

Additionally, it is stated that if any contract or transaction goes beyond the threshold limit or the company’s paid up share capital is not less than the amount as prescribed, then approval of the company through a special resolution will be required to be entered by furnishing proper details and disclosures regarding the related party transaction without which no such contract or transaction shall take place. It is further provided that any member of the company that is to enter into an agreement with another, if it is a related party, shall not vote on such a resolution. ¹³

Exception: Transactions which are done on arm’s length basis¹⁴ do not fall under the ambit of section 188 and are immune to board and shareholder ratifications.

It is to be noted that every contract or arrangement entered through the ways mentioned in the above transactions under section 188, shall be reported to the shareholders by the board containing justifications and reasons for entering into such contract/arrangement.

B. Shareholders’ Approval

There is a threshold limit set on Related Party Transactions beyond which the approval of shareholders is obtained by way of an ordinary resolution and is specified under Rule 15(3) of Companies (Meetings of Board and its Powers) Rules, 2019¹⁵. The following are the transactions:

• 10% or more of the turnover of the company in case of sale, purchase or supply of any goods or material (directly or through an agent)
• 10% or more of the turnover of the company in case of selling, buying, leasing or disposing of property of any kind (directly or through an agent)
• 10% or more of the turnover of the company in case of Availing or rendering of any services (directly or through an agent)

All the above threshold restrictions are to be extended to all transactions carried out on a financial year basis.

• Remuneration exceeding Rs. 2,50,000 per month in case of appointing any person to any office or place of profit in the company, subsidiary company or associate company
• Remuneration exceeding 1% of net worth in case of underwriting the subscription of any securities or derivatives of the company.

C. Audit Committee’s Approval

The Section 177 of the Act¹⁶ states that all the transactions in relation to related party shall require an approval from the audit committee of the concerned company. The audit committee shall also approve any subsequent modifications required. This approval is irrespective of the ordinary business or arm’s length principle.

D. Approval under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 20l5 and Clause 49(V1I)

Under Regulation 23 and Clause 49(VII), all listed entities should formulate a policy regarding all materiality on related party transactions¹⁷ along with due approvals from the board of directors. It should be reviewed by the board at least once every 3 years and accordingly updated if needed.

The most important criteria is that all related party transactions require prior approval of the auditing committee. The audit committee also has powers to grant omnibus approvals under certain conditions as mentioned under Clause 3 of Regulation 23 and Clause 49(V1I)(D).

The approval of shareholders through ordinary resolution is to be obtained in all matters of related party transactions, regardless of it being in ordinary business or arm’s length basis and it is to be noted that no related party shall vote to approve any such resolutions whether the entity is a related party to the particular transaction or not.

There are enhanced disclosures after 2014 amendment wherein it is required that all material details in reference to related party transactions shall be quarterly disclosed along with compliance reports. The policy formulated by the company on dealing with related party transactions shall be disclosed on their website and in the annual report.

III. Case analysis

SEBI took cognizance in the matter of Raymond Ltd. to inspect if any violations of norms on corporate governance have taken place or not as prescribed by SEBI under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 after coming across an article titled, “IiAS slams Raymond's bid to sell JK House to promoters at throwaway price”¹⁸ in Business Standard in 2017.

SEBI therefore, conducted an examination and observed that Raymond was allegedly in violation of the provisions of Regulation 23(2) of the LODR Regulations read with c1ause 49(VII)(D) of the erstwhile listing agreement ( as amended via SEBI circular of April l7, 2014) by failing to obtain the requisite approval for certain related party transactions. There were other violations as well which do not form part of this research.

As a result of the alleged violations, adjudication proceedings were initiated against Raymond Ltd. under Section 23A (a) read with Section 23E of the Securities Contract (Regulations) Act, l956.

Facts of the Case

JK Building, located in Mumbai, was leased/rented to Raymond's promoter/director (sub-lessees/tenant) during the financial years 2006-2007 to 2016-2017 through a tripartite agreement with Pashmina Holdings Ltd., who is a sub-Lessor, along with Raymond, being the Lessor.

Raymond Company leased 4 flats in JK House to Pashmina for 9 years initially at the rate of Rs. 6000 per flat, per month through four different agreements dated March28, 1994. Pashmina then sub-leased these 4 flats at the rate of Rs. 7500 per flat, per month. After the expiry of this agreement, another lease deed was executed for 9 years on March 27, 2003 in favor of Pashmina under the same provisions and Pashmina again sub-leased the flats under same provisions as well as before for a term as equivalent to original lease dated March, 2003. The current lease was to expire on March 26, 2012.

Subsequently, JK House was under reconstruction and alternative accommodation was given to the sub-tenants from May 2007 to November 2015 under a tripartite agreement dated November 6, 2007, entered between the Raymond Company, Pashmina and Sub-tenants “in consideration of the sub-lessees surrendering/transferring their rights and possession in respect of the existing premises in favour of Raymond.”¹⁹ It is reported that the sub-tenants paid a small amount of Rs. 7,500 per month per sub-tenant as rent, while the expenditure incurred by the company to provide each of the sub-tenants with alternative accommodation was Rs. 8 lakh per month during this period. In FY 2015-16, rent payable by sub-tenants remained the same, but expenditure incurred by the Company to provide each sub-tenant with alternate accommodation increased to Rs. 12 lakhs per month.

Therefore, it was claimed that the business offered alternative accommodation at a discount of approximately 99 percent to sub-tenants. This difference in the rent paid by sub-tenants and the company suggests that the object of the tripartite agreement was to provide the promoters with undue economic advantages at the expense of the company and the funds of its shareholders.

According to Regulation 23(2) of the LODR Regulations, all transactions by related parties require mandatory prior approval of the auditing committee. For this aspect, the Company vide letter dated June 06, 2017 stated that no approval of the Audit Committee was needed as payment for alternative accommodation was made directly to the licensors, who were and are in no way related parties as specified under the Companies Act, 20l3, being unrelated third parties (under relevant agreements).

But it was alleged by SEBI that the company as violated Regulation 23(2) of Listing Regulations and c1ause 49 (VII)(D) of the SEBI Circular of April l7, 2014 because, in their defense, there was no question that a tripartite agreement is a transaction deemed to be a related party, so any payment resulting from a tripartite agreement should therefore be treated as related party transaction. The payments that were made pursuant to the tripartite agreement of December 01, 2015 under the LODR Regulations, approval of the audit committee was therefore necessary.

Charges against Raymond Ltd. in respect of Related Party Transactions

The charge made under the show cause notice issued to Raymond Ltd. was the Alleged non-approval of current related party transactions in connection with the payment of alternative accommodation to sub-tenants, namely, Mr. Akshaypat Singhania, Mr. Gautam Singhania and Ms. Veena Devi Singhania during the time of JK House's redevelopment (financial year 2014 till date) under:

i) Regulation 23(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 20l5 (Listing Regulations)

ii) Clause 49 (V1I)(D) of the listing agreement under amended Securities and Exchange Board of India (SEBI) circular dated April l7, 2014.

Submissions by Raymond Company

1. The costs incurred by the Company in providing alternative accommodation to the Sub-Tenants were as per the prevailing tenancy rent, and also in accordance with the terms of the Tripartite Agreements that was entered into by the parties. Further, required approvals were sought in order to enter into Tripartite Agreements and/or to exercise the possibilities arising out of the same, as and when needed.

2. The Company rendered payments in respect of alternative accommodation (that was given to the Sub-Tenants) directly to the licensors, in compliance with the applicable leave and license agreements. As these licensors are not 'related parties' (as specified under the Companies Act, 20l3) to the Company, it was bona fide that no procedural compliance with related party transactions was required. The protocols concerning the Audit Committee were also not followed as they were not relevant.

3. The respective payments began in 2006-07 which was well before notification of the Listing Regulations was introduced. It is settled law that no legislative provision can be enforced retrospectively and that all requests must be made only prospectively. Hence, Regulation 23(2) of the Listing Regulations should also be read and applied prospectively. In addition, Regulation 23(6) states that the provisions under this regulation are to be applicable to all prospective transactions.

4. The Company obtained the requisite approvals from its audit committee, board of directors and/or shareholders for the related party transactions entered into by it, as requested, and, from time to time, made the appropriate disclosures mandatory.

5. As regulated by the provisions of Companies Act, l956 and the Listing Agreement, it was only the approval of the Company's board of directors that was necessary for the Tripartite Agreements to be entered into. In view of this, the Company's board of directors approved the execution of the Tripartite Agreements at its meeting held on June 23, 2006 and executed on November 6, 2007.

6. The letters which were received from the sub-tenets for exercising the option of purchasing the flats of JK House under the said Tripartite Agreement which had lower prices than that of prevalent market rates, this issue was successfully placed before the audit committee. The committee reviewed the matter in hand and noted that the agreements were neither in ordinary course of business nor at arm’s length basis. Further, as per the legal advised sought by the company, the committee requested that approval of

7. The shareholders shall be taken in accordance with Section 188²⁰ if at all any purchase was to be made.

Subsequently, at a meeting conducted by board of directors on April 28, 2017, it was decided to refer the matter to the shareholders. The annual general meeting was held on June 5, 20l7 where the shareholders rejected the transaction under the Tripartite Agreement and following their decision, the company complied. The required disclosures were made in a timely and prompt manner regarding seeking shareholder approval and the result of the shareholder vote.

8. Lastly, appropriate and timely responses were made via letters to the queries submitted by SEBI regarding the matter. Due compliance was done under SEBI’s circular dated April l7, 2014. Despite this, SEBI falsely concluded the violations on part of the Company, without application of mind or due diligence.

Issue for consideration

Whether Raymond Ltd. violated the provisions of Clause 49(V1I)(D) of the listing agreement, as amended via SEBI circular dated April l7, 2014 and Regulation 23(2) of LODR Regulations?

Findings and Observations

It was observed by the Adjudicating Officer that all the four entities satisfied the definition of “Related Party” as provided in Section 2(76) read with Section 2(77) of Companies Act, 2013 and adopted in Regulation 2(l)(zb) of LODR Regulations. Furthermore, at the 92^nd annual general meeting, the company has accepted the entities as related parties. Since, Pashmina was a wholly owned subsidiary of Raymond, the accommodations given to the sub-lessees constituted related party transactions.

The rent paid for the accommodations provided to the sub-lessees were to be considered related party transactions because it is not necessary that the fund should flow from the company (Raymond) to the related party directly. Under the Tripartite Agreement, Raymond was bound by an obligation of the said agreement to provide an apartment in return of rent received from Pashmina, this fund movement being made to the licensors constitutes related party transactions.

For the argument advanced by Raymond Ltd. regarding the prospective applicability of the respective SEBI circular dated April17, 2014, the Adjudicating Officer was of the view that since the said transaction was entered into by the Company in 2007, the amending provisions of the said circular and the LODR Regulations became applicable from April 17, 2014, the law was not applicable to these transactions and there was requirement to take approvals from auditing committee. Therefore, no violations were committed at that time of entering into the agreement.

But, for the four new agreements having no reference to the previous agreements, entered after April 17, 2014 with effect from October 1, 2014, dated May 11, 2015, May 27, 2015 and September 15, 2015 were liable to be complied under the amending provisions of c1ause 49.

Therefore, the Adjudicating Officer found it relevant to conclude that these agreements dealt with related party transactions by relying on the definition of the term “transaction” under Regulation 2(l)(zc) of LODR Regulations and that the company should have taken prior approval of the audit committee via SEBI circular of April l7, 2014, which it failed to do.

Decision

It was held that the applicability of the provisions of LODR Regulations were not applicable to the transactions entered between May and September 2015 since the LODR provisions were notified on September 7, 2015 and were to come into effect only after 90 days of such notification in the Official Gazette. Nonetheless, the Company had violated the provisions in respect of c1ause 49(VII)(D) of the listing agreement, as amended via SEBI circular of April l7, 2014.

The final order passed by the Adjudicating Officer imposed a penalty of 7 lakhs on Raymond Ltd. under Section 23E of SCRA for the violation of c1ause 49(VII)(D) of the listing agreement via SEBI Circular of April l7, 2014.

IV. Consequences under related party transactions

Thanks to early 21st century technology and electronic communication methods, ethical issues in industry are gaining considerable prominence. Due to the dynamic nature of markets and its surrounding environmental changes, the laws and policies are always in need of amendments and strategies to keep up with the emerging trend and to take care of loopholes.

Why do corporate/ businesses follow unethical practices?

Although many factors contribute, the need for instant gratification on the part of owners and managers is a driver of bad business ethics. It has been observed over a period of time that the related party transactions are vulnerable to manipulation by individuals in charge of the corporate entity's decision-making for personal gains because they are not prohibited per se. The person engaging in such transactions might serve as a double advantage since the other party is related to him. The monetary benefit to be obtained via these transactions constitutes vast majority of the unethical decisions taken on part of the companies. It is the desire to increase shareholder’s wealth, rapid economic and financial growth for the company and sometimes to avoid taxes that these practices are followed.

In many such cases, since a clear ethics model is not provided by the company, administrators and staff show poor ethical behavior. A corporate management manual and ethical code of conduct usually define ethical guidelines and consequences for poor decisions. Some organizations do not have structured ethical compliance architecture thereby not providing any guidelines at all and if at all there are any directions under policies, they are vague and inconsistent.

Another reason can be the inefficiency and non stringent laws/policies governing the transactions which are under government control. Lack of real and effective punishment does not deter the companies from following unethical routes.

Why to follow good practices?

It is important that the companies and businesses follow good practices in order to avoid the type of abuses as mentioned above since in a country like India where there is presence of companies that are closely held and promoter driven, there is always high risk of abuse by way of related party transactions. Further, it is necessary to provide a fair, reasonable and healthy competition in the market thereby, providing an incentive for new and existing companies for sufficient opportunities and at the same time suppression on monopolistic behavior in future.

Although unethical practices may cause the corporate entity entering related party transactions to experience a substantial loss of value, similar transactions have already been widespread and have since led to market development and growth for companies across the globe. Therefore, the government has allowed related party transactions notwithstanding the risk of abuse, but with some procedural safeguards and protections.

Failure to comply with the Act and Rules can make related party transactions void and mean penalties for the violator. A related party transaction entered into without the consent of the Board or the approval of the General Meeting by resolution and not ratified by the Board or the shareholders within three months of the date on which the agreement or arrangement was entered into can, as the case may be, be void at the option of the Board or the shareholders.

The corporation also has the option of continuing to recover any damages suffered due to that contract against a director/ employee who has entered into such a contract or arrangement in violation of the said Act.

A director or any employee of a company entering into an illegal related party transaction shall be liable for:

• Fine of minimum 25,000 which can be extended to 5 lakh rupees or imprisonment which may be extended to one year or in some circumstances both, this scenario is for a company listed; and
• Fine minimum 25,000 rupees which can be extended to 5 lakh rupees, in the case of any other company.”²¹

V. Conclusion and recommendations

In light of the information presented in this paper we can conclude that instead of banning Related Party Transactions, SEBI felt the need to provide a regulatory mechanism to minimize the risk of such transactions being exploited at the corporate entity's expense. In addition, according to SEBI, an ideal regulatory framework for related party transactions promotes to increase its value for the company while penalizing undesirable RPTs keeps them under check for market forces operating at a global level.

The decision of Adjudicating Officer to impose a penalty on Raymond Ltd. was justified to secure compliance and showcase effective working of legal and regulatory framework. The intention behind this decision was clear as in order to guarantee robust corporate governance in any of the existing sectors, following of conduct of related party transactions in the manner defined by the Act is crucial. In this environment of increased regulation, businesses should be extremely careful not to allow any lapses in corporate governance.

Suggestions

In spite of the fact that India has among the most comprehensive system of various regulations, rules and policies for both listed and unlisted entities in case of disclosures and approvals of related party transactions, it still fights for implementation of good governance.

From Companies Act, 2013 to Ministry of Corporate Affairs and SEBI, all regulate the related party transactions. There are strict rules for listed companies than unlisted entities because of public money at stake. However, these regulators find it difficult to strike a balance between protection of stakeholder’s interest and easy compliance policies. The regulators and the government should find a way to bring the unlisted companies where there is public money involved under the domain of provisions relating to related party since for many years it has been in a state of flux.

I do not think that the current regime and policies that are regulating related party transactions are enough to control the abusive conducts of companies as seen under this research where a big company like Raymond was involved in these violations as well. The main issue is the use of subsidiaries to perform these abusive transactions. There needs to be stricter approach towards the regulatory framework and the definition of related party under SEBI (LODR) should be widened enough to include any person/ entity of the promoter or group of the promoter of the listed entity, irrespective of its shareholding. If we are considering to enlarge the scope of related party then modifying the definition of related party transactions is also a must under section 2(zc) of the regulations by introducing a “catch all” phrase covering transactions between the entity listed or one of its subsidiaries and the related party of the entity listed or one of its subsidiaries. Further including, the entity listed or any of its subsidiaries at one end and on the other, any other individual or entity whose intent and effect will be to support a related party to the listed entity or any of its subsidiaries. The minimum threshold limit of transactions exceeding 10% of annual consolidated turnover that require shareholder approval needs to be rechecked. Furthermore, requirement of special resolution undermines the rights of minority shareholders which need to be considered.

“The pressure on the audit committee has evolved dramatically over the years. The majority of audit committees complain about onerous tasks and increased workloads. A balance between compliance and welfare should be maintained. Numerous transactions need industry experience in sectors where the businesses operate. It’s critical to maintain the composition of the audit committee properly altered in order to ensure that industry experts are appointed.”²²

In the end, it is safe to say that there appears to be no end to the unquenchable thirst of taking full advantage/benefit of each loophole in the law and the apprehension of the regulators to close each backdoor in the regulatory infrastructure. Time will tell where these regulations take us in the future.

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VI. Bibliography

Books

• Company Law by Avtar Singh
• Company Law by Dr. H.K. Saharay

Statues

• SEBI (Listing Obligations and Disclosure Requirements), 2015
• Companies (Specification of Definition Details) Rules, 2014
• Companies (Meetings of Board and its Powers) Rules, 2019
• Companies Act, 1956 and 2013

Newspapers

• The Hindu
• Economic Times
• Business Standard

Websites

• www.taxguru.com
• www.sebi.gov.in
• www.corporate.cyrilamarchandblogs.com
• www.obhanandassociates.com
• www.mondaq.com

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Footnotes

1. Author is a student at National Law University, Jodhpur, India.

2. The Raymond Group, “Overview” https://www.raymond.in/theraymondgroup?cat=14, (Last Visited on Jan. 2,2020). ↩

3. Companies Act, 2013 [as amended by Companies (4^th Amendment) Bill, 2020]. ↩

4. Rameshwar, “Related Party under Companies Act, 2013” TaxGuru, (01 May 2018), https://taxguru.in/company-law/related-party-companies-act-2013.html, (Last Visited on Jan. 2, 2020). ↩

5. Ministry of Corporate Affairs, “Companies (Specification of Definition Details) Rules” (March 31, 2014), available at: https://www.mca.gov.in/Ministry/pdf/NCARules_Chapter1.pdf ↩

6. Securities Exchange Board of India, “SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015”, (Sept. 2, 2015), https://www.sebi.gov.in/legal/regulations/jan-2020/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-regulations-2015-last-amended-on-january-10-2020-_37269.html, (Last Visited on Jan. 2, 2020). ↩

7. Supra Note 4. ↩

8. Supra Note 2. ↩

9. Supra Note 3. ↩

10. Vikrant Rana, Rupin Chopra, “A Brief Overview Of Related Party Transactions”, Mondaq, (July, 26,2017), https://www.mondaq.com/india/contracts-and-commercial-law/614332/a-brief-overview-of-related-party-transactions, (Last Visited on Jan. 2, 2020). ↩

11. Supra Note 2. ↩

12. Ashima Obhan, Vrinda Patodia, “Related Party Transactions: How Close is too Close?”, Obhan & Associates Blog, https://www.obhanandassociates.com/blog/related-party-transactions-how-close-is-too-close/?utm_sourc e=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration, (Last Visited on Jan. 3, 2020). ↩

13. Section 188(1) of Companies Act,2013. ↩

14. The expression “arm’s length transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest. ↩

15. As per Second Amendment on November 18, 2019. ↩

16. Supra Note 2. ↩

17. A transaction with a related party shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds ten percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity. (As per new amendment in 2019, if the transaction relates to brand usage or royalty, then the amount to be considered in the above explanation shall be exceeding five percent). ↩

18. N Sundaresha Subramanian, “IiAS slams Raymond's bid to sell JK House to promoters at throwaway price”, Business Standard, (May 25, 2017), https://www.business-standard.com/article/companies/iias-slams-raymond-s-bid-to-sell-jk-house-to-promoters-at-throwaway-price-117052500309_1.html, (Last Visited on Jan. 3, 2020). ↩

19. PTI, “Sebi fines Raymond for violating market norms”, The Hindu, (Nov. 20, 2020), https://www.thehindu.com/business/sebi-fines-raymond-for-violating-market-norms/article33138607.ece, (Last Visited on Jan. 3, 2020). ↩

20. Supra Note 2. ↩

21. Supra Note 9. ↩

22. Bharat Vasani, “SEBI Working Group on Related Party Transactions: Will the net be cast too wide?”, Cyril Amarchand Blogs, (February 5, 2020), https://corporate.cyrilamarchandblogs.com/2020/02/sebi-working-group-on-related-party-transactions-will-the-net-be-cast-too-wide/, (Last Visited on Jan. 4, 2020). ↩