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    Transaction is ordinary course and arms’ length

    Posted By : Sohil / Published on : 19-Apr-2023 07:14 AM / View : 163 / Comment : 1

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    Mere fact that transaction is ordinary course and arms’ length can save a transaction for being categorized under 'purpose and effect' under RPT?
    Read more on : length arms course ordinary transaction

    • The fact that a transaction is in the ordinary course of business and conducted at arms' length does not necessarily guarantee that the transaction will be exempt from being categorized as a related party transaction (RPT) based on its purpose and effect.

      In general, the fact that a transaction is in the ordinary course of business and conducted at arms' length may be helpful in showing that the transaction is not primarily motivated by a desire to benefit related parties, and thus may help to avoid the categorization of the transaction as a related party transaction (RPT) that could be subject to greater scrutiny or potential challenge.

      However, it is important to note that the determination of whether a transaction is an RPT is not solely based on the purpose or intent of the transaction, but also on its effect or impact. This means that even if a transaction is conducted at arms' length and in the ordinary course of business, it may still be considered an RPT if it has a significant impact on the related parties involved, such as if it results in a material financial benefit or loss to one or more parties.

      More, it is important for companies to carefully evaluate and disclose any potential RPTs and to take steps to ensure that such transactions are conducted in a manner that is fair and reasonable to all parties involved, and that any conflicts of interest are properly managed and disclosed.

      19-04-2023 / 11:02:47 AM
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