Scrutiny of corporate governance for Related Party Transactions (RPTs) has been continually increasing. Recent SEBI amendments in India have made it clear that companies can no longer treat compliance as a tick-box exercise – compliance now requires precision, timelines and full transparency.
For organizations, transactions with entities may include subsidiaries, JVs, vendors, clients and complex stakeholder relationships as well as with multiple individuals related to these entities. Traditional manual tracking is not just operationally cumbersome – it is risky and delays payments or reviews or compliance reporting or both.
With an increasing number of relationships, an increasing number of parties under each of these relationships and an increasing number of transactions for each, a digital shift is called for.
Why does regulatory compliance need a digital backbone?
Managing RPTs involves navigating and crystallizing definitions, managing thresholds, reviewing transactions, managing reviews and audit-committee approvals and stakeholders’ disclosures. In, say, a spreadsheet-driven system, the probability of missing a transaction, misclassifying a relationship, missing a review or reporting is operationally cumbersome at best and risky at worst.
These errors can quickly translate into regulatory penalties, reputational damage, or shareholder disputes.
Digitization addresses these points head-on. A robust related party management system reduces dependence on operational vigilance alone and replaces fragmented processes with an integrated, automated structure. Instead of compliance officers chasing down data across departments, an application that creates a centralized related party database where every relationship, transaction, and approval can be automatically monitored in real-time is essential.
Beyond Manual: Why Compliance must go Digital now
The real challenge is no longer just about compliance; it’s about the scale and speed at which the organizations are expected to comply. With materiality thresholds tightened and audit committee tasked with sharper more numerous oversights, relying on older methods is akin to using an old and outdated map in a fast-moving world to navigate. Moreover, there are increasing requirements not just in relation to reviews but also in relation to the minimum information required to be provided and signed-off on as part of the review.
- Time Efficiency: Automated related party compliance tool can cut hundreds of hours of manual record-management into minutes by automating the tasks of flagging the relevant transactions which need your attention.
- Accuracy: Automated RPT approval workflow that ensures that transactions routed for review meet regulatory thresholds and company-specific rules – minimizing human oversight risks.
- Governance: Shareholder and regulators demand clarity. A digital trail ensures every RPT approval and disclosure is supported by transparent, verifiable data.
This digital backbone also makes it easier to tackle the risks of RPTs – conflicts of interests, non-arm’s length pricing, and the governance blind spots. Embracing automation is not only meeting SEBI’s mandates but also sending a strong message to investors about how seriously compliance and governance is taken at your organization.
Redefining RPT Compliance with Affinis(RPT)
Affinis(RPT) is designed to meet the growing complexity of meeting the RPT compliance while keeping the user experience simple. Built as a central platform for tracking, monitoring and reporting, Affinis(RPT) ensures regulatory reporting of RPTs while eliminating the operational gaps. Some of the standout capabilities include:
- Auto-identification and Re-routing– Affinis(RPT) offers seamless integration with ERP for related party management to auto-identify transactions with Related Parties and re-route them to Audit Committee for approval.
- Omnibus Approval Management– Audit Committees can manage omnibus approvals with built-in validity checks and meet the renewal requirements with the renewal alerts.
- Pre-Checks and Arm’s Length Monitoring – Automated pre-validations confirm whether transactions align with regulatory requirements and arm’s length principles before approval are sought.
- Centralized Relationship Mapping– Affinis(RPT) maintains a map of all the internal and external parties, subsidiaries, and connections, ensuring that no hidden relationship goes unnoticed.
- Comprehensive Reporting– Generate detailed compliance reports by related party, period, or transaction types or any combination to meet the reporting requirements with Affinis(RPT)- the related party transaction reporting module.
RPTs will continue to evolve as regulators sharpen their governance lens. The compliance workload will only grow and the companies that rely on manual monitoring systems would be left behind in a compliance environment that rewards agility, accuracy and transparency. Affinis(RPT) as a corporate compliance software for RPTs ensures that organizations move from compliance fatigue to compliance confidence and the RPT compliance shifts from being a reactive obligation to a proactive governance practice.
