Article · Corporate Law & Governance
For Directors · Collective Governance, Regulatory Warfare & Exit Readiness
The Indirect Interest Scan Your RPT Process Is Probably Missing
Directorships and direct shareholdings are the easy cases. The relationships that matter often sit one layer further out.
2 min read
Related-party controls usually identify obvious connections: a director's company, a close relative's direct interest, or an entity in which a key managerial person is plainly involved. The harder cases involve indirect holdings, partnership interests of relatives, trusts, layered structures, significant influence, or commercial relationships that are not captured by a basic annual declaration.
Section 184 disclosures and the broader related-party framework under the Companies Act and SEBI LODR Regulations require substance-focused identification. A questionnaire limited to directorships and direct shareholdings can miss a relationship that requires disclosure, abstention, enhanced review, or a different approval process.
Update interest declarations to ask about beneficial holdings, partnerships, trusteeships, management roles, control rights, material commercial relationships, and relevant interests of relatives through entities or arrangements. Require prompt updates when circumstances change, not only an annual confirmation.
Cross-check declarations against vendor and customer data, ownership information, and recurring transaction patterns. A transaction may be commercially fair and still require the correct related-party process. Identifying the relationship before approval is the essential control.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Boards should consult qualified legal counsel for company-specific guidance.