Related-party transactions are not automatically prohibited, but they need identification, approval and evidence. The weakest RPT file is one that starts after the auditor asks for details.
Section 188 covers specified contracts or arrangements with related parties, including sale/purchase/supply of goods or materials, property transactions, leasing, services, appointment to office/place of profit and underwriting, subject to conditions.
| Control | Why it matters |
|---|---|
| Related-party master list | Identifies covered parties before transaction. |
| Ordinary course assessment | Supports whether transaction falls within routine business pattern. |
| Arm's length evidence | Pricing, quotations, comparable terms or valuation support. |
| Board/shareholder approval review | Check whether approval threshold and route apply. |
| Register and financial statement disclosure | Connect secretarial and accounts records. |
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Section 188 covers specified related-party contracts and arrangements.
No. They must be identified, approved and supported as required by law.
Comparable quotes, pricing policy, valuation, board note and actual business rationale help.