Related Party Transactions: Where 'If Any' Does All the Work

Section 188 of the Companies Act, 2013 requires Board approval by resolution for related-party contracts and, beyond the thresholds in Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014, prior shareholder approval by ordinary resolution, with related parties barred from voting. Rule 15 adds the operative mechanics: agenda disclosure of "the manner of determining the pricing and other commercial terms," plus the materiality bands.

Checked directly against both texts, neither mentions "valuation," "fair value," or "registered valuer" anywhere. The only pricing concept in Section 188 is negative. A transaction in the ordinary course of business and on an arm's length basis falls outside the section entirely — exempt rather than valued.

Regulation 23 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015 layers Audit Committee approval and, above a ₹1,000 crore or 10 per cent consolidated-turnover threshold, shareholder approval on top of Section 188 for listed companies. The bare regulation mandates no valuation report either.

The industry standards SEBI has endorsed for RPT disclosure come closest, and give the pattern away in their own wording. The minimum-information annexure asks a company to "provide a copy of the valuation or other report of external party, if any," and to give shareholders a link to "the valuation report or other reports of external party, if any."

Disclosure is mandatory once a valuation report exists. Obtaining one is not.

The arm's-length disclosure under Ind AS 24 is conditional on its own terms. It is required only where the terms "can be substantiated" — a disclosure test, not a mandate to obtain independent verification of the price.

This was the more promising candidate. Section 92BA of the Income-tax Act once swept ordinary related-party payments under Section 40A(2)(b) into a mandatory arm's-length study. That limb, clause (i), was omitted by Finance Act 2017, and an ITAT ruling the same year held the omission wipes it from the statute book as though it had never been enacted.

What Section 92BA reaches today is narrow: tax-holiday businesses under Section 80-IA, SEZ units, and Section 115BAB manufacturers. An ordinary Section 188 transaction, a company buying goods from a director's other company, sits outside it entirely.

The Corporate Laws (Amendment) Bill, 2026, already covered in A 2020 Committee Said Leave IBBI. A 2026 Bill Makes It Permanent., adds an Audit Committee appointment requirement for company-law valuers.

That requirement attaches to valuations already mandated elsewhere under the Act. A Section 188 transaction has none, so there is no valuer for the Audit Committee to appoint. The Bill tightens who appoints a valuer without creating an occasion to appoint one.

Commission a valuation for a material related-party transaction as governance discipline, and do not describe it to the board as a legal requirement. It is not one, and the distinction matters when a transaction is later challenged: the report is evidence that the price was tested, not evidence of compliance with a rule that does not exist.

Structurally, an RPT sits closer to Share Buy-backs: The One Mechanism With No Valuer Mandate At All than to a preferential allotment under Section 62(1)(c), which does require a registered valuer's report. The framework's instinct here is to police who approves and who recuses, not whether an independent professional verified the price.

Two words carry the whole design. "If any" makes room for a valuation report. It does not ask for one.