ET Prime Special Series: Related-party transactions (Part 1) – When relations come up as a risk to retail investors

A company might lend money to promoter-linked entities at low interest rates, pay heavy remuneration to directors even when there is a cash crunch, keep rolling over loans to related parties that were never meant to be seriously collected. These are just a few examples of how companies manipulate related-party transactions, or RPTs. This story explains what related parties and RPTs are, why they matter so much for investors, how they can quietly shift value away from the company, and what you, as an investor...