New Delhi, June 2 -- The ministry of corporate affairs has reminded business promoters of the penalties for not following an arms-length approach in transactions involving company directors, executives, relatives and firms linked to such persons.

Emphasising the importance of adhering to guidelines covering related-party transactions to ensure transparency, fairness, and long-term sustainability of businesses, the ministry said such deals are prone to conflicts of interest.

The ministry's reminder comes amid ongoing proceedings against executives of Gensol Engineering Ltd for alleged diversion of funds to various related parties in violation of rules under the Companies Act.

The National Company Law Tribunal (NCLT) last week allowed th...