DESC:FORM 2

THE PATENTS ACT, 1970
(39 of 1970)
&
THE PATENT RULES, 2003

COMPLETE SPECIFICATION
(See Section 10 and Rule 13)

Title of invention:
A SYSTEM FOR MANAGING RELATED-PARTY TRANSACTIONS (RPTs) AND METHOD OF OPERATION THEREOF

Applicant:
Legasis Private Limited
Having address as:
12A/09, 13TH FLOOR, PARINEE CRESENZO,
G BLOCK, BKC, BANDRA EAST, Mumbai - 400051,
MAHARASHTRA, India

The following specification particularly describes the invention and the manner in which it is to be performed.

CROSS REFERENCE TO RELATED APPLICATION AND PRIORITY
[001] The present invention claims priority from Indian patent application 202421079372 filed on date 18th October 2024.
TECHNICAL FIELD
[002] The present invention relates to a system and method for related party interest's information and transactions (RiiT). More particularly, the invention relates to the RiiT system to effectively manage related party (RP) transactions.
BACKGROUND OF THE INVENTION
[003] Conventional method that are used for related party transactions (RPT) have certain disadvantages which are explained below in detail:
[004] Inefficient Manual Management of Related-Party Transactions- Maintaining the Related Party Index and overseeing related-party transactions is currently a cumbersome and time-consuming manual process within organizations. This inefficiency has given rise to several critical pain points:
[005] Manual and Time-Intensive Process: The conventional methods involve manual effort in managing the related party transaction (RPT) approvals and transactions which leads to inefficiencies and consumes valuable time. Employees are required to manually insert and update data, resulting in a slow and resource-intensive workflow.
[006] Mismatch and Non-Consolidation of Numbers: The absence of an automated system often results in discrepancies in reports submitted to statutes, board & shareholders and a lack of consolidation in the recorded numbers. This poses a significant challenge in ensuring accuracy and consistency in related-party transaction data.
[007] Late Tracking of Ratification and Over-Budget Transactions: The delayed tracking of ratification and transactions exceeding budget limits is a prevalent issue. With the manual system, identifying these instances is often retrospective, leading to potential financial risks and regulatory compliance challenges.
[008] Non-Monitored Transactions: The lack of real-time monitoring of transactions is a critical concern. Without an automated system, the organization is susceptible to overlooking or being unaware of certain related party transactions, leaving the company exposed to potential financial and reputational risks.
[009] Risk of Errors and Brand Name Impact: The manual nature of the process introduces a heightened risk of errors. Mistakes in data entry and maintenance not only compromise the accuracy of financial records but also pose a direct threat to the brand name of the company. Inaccuracies can erode trust and credibility with stakeholders.
[0010] Regulatory Compliance Challenges: The manual process makes it challenging to keep up with evolving regulatory requirements. This increases the risk of non-compliance, potentially leading to legal issues and financial penalties.
[0011] Hence to overcome the aforesaid drawbacks a related party transactions (RPTs) system is required.
OBJECTS OF THE INVENTION
[0012] Main object of the present disclosure is to provide a related party interest's information and transactions (RiiT) system to record, manage, control, and auto-update the related-party (RP) information of the users/customers organization.
[0013] Another object of the present disclosure is to provide the RiiT system to accept or reject related-party transactions (RPTs) with or without tagging of the related party list in the ERP system based on user-defined criteria.
[0014] Yet another object of the present disclosure is to provide an auto-update feature configured to maintain a dynamic related-party index or list, by providing accuracy and reducing manual workload.
[0015] Another object of the present disclosure is to provide an advanced AI module integrated with the RiiT system configured to perform contract management and predictive analysis to enhance transaction processing and decision-making.
SUMMARY OF THE INVENTION
[0016] Before the present a related party interest's information and transactions (RiiT) system is described, it is to be understood that this application is not limited to a particular related party interest's information and transactions (RiiT) system as there may be multiple possible embodiments, which are not expressly illustrated in the present disclosures. It is also to be understood that the terminology used in the description is for the purpose of describing the particular implementations, versions, or embodiments only, and is not intended to limit the scope of the present application. This summary is provided to introduce aspects related to a related party transactions (RPTs) system. This summary is not intended to identify essential features of the claimed subject matter nor is it intended for use in determining or limiting the scope of the claimed subject matter.
[0017] The present invention discloses a related-party interests information and transactions (RiiT) system to revolutionize the management of related-party transactions (RPTs) and associated data. The application completely automates the related party transaction (RPT) processes. The RiiT offers a sophisticated method for controlling, recording, and organizing related-party identification, interests, and transactions, providing a robust RiiT system for initiating conflict of Interest. The RiiT system effortlessly indexes and classifies all Related Parties, and seamlessly tracks material transactions. The (RiiT) system facilitates the management of approvals, ensuring timely workflows, and enhancing the disclosure process. The RiiT system provides a user-friendly interface for controlling RPTs and generating periodic disclosures, allowing for thorough reviews and streamlined audit procedures. The Related-party transaction (RPT) management system is a secure, and efficient approach.
[0018] In one embodiment, the RiiT system tags the new Related Party (RP) in the ERP system. When a new related party/customer/ vendor transaction enters the client's ERP system, then the Inbound API call will go towards the RIIT system. The RiiT system checks the list of related party lists and normal customer lists and compares it with the received transaction. But if a new related party transaction is received then the system will go through the approved transaction budget and check whether the received transaction is in the budget or not as well as the additional budget. If the received transaction exceeds the budget, then the RiiT directly rejects/denies the related party (RP) transaction and if the received transaction is within the budget then the RiiT system will record the transaction along with the criteria which is already defined in the RiiT system.
[0019] In another embodiment, the RiiT system can accepts/rejects the related party (RP) transaction. As per the requirement of the user/client/customer the RiiT system is adaptable to change the workflow of tagging and without tagging of the related party (RP) into the ERP system.
[0020] In another embodiment, the present invention discloses a system for managing related-party transactions (RPTs). The system comprises a RiiT system configured to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity, integrated with Enterprise Resource Planning (ERP). The Enterprise Resource Planning (ERP) system coupled with the RiiT system, configured to perform related-party tagging and manage transaction details, wherein the ERP system utilizes an application programming interface (API) to send related-party tagging information to the RiiT system and receive transaction updates from the RiiT system for financial reporting and analysis.
[0021] In another embodiment, the present invention discloses that the RiiT system is configured to accept or reject related-party transactions (RPTs) with or without tagging of the related party list in the ERP system based on user-defined criteria.
[0022] In another embodiment, the present invention discloses that the RiiT system includes an auto-update feature configured to maintain a dynamic related-party index or list, by providing accuracy and reducing manual workload.
[0023] In yet another embodiment, the present invention discloses that the RiiT system is configured to record transaction data, including transaction type, parties involved, and amounts, on a blockchain ledger as blocks.
[0024] In still another embodiment, the present invention discloses that a blockchain network is configured to allow access only to authorized users for viewing and adding transactions.
[0025] In still another embodiment, the present invention discloses that the blockchain network comprising a smart contract module and a data block, wherein the smart contract module is configured to perform compliance management to verify if a transaction complies with predefined rules.
[0026] In yet another embodiment, the present invention discloses the system is configured to record transaction data, including transaction type, parties involved, and amounts, on a block chain ledger as blocks.
[0027] In another embodiment, the present invention discloses that the system comprising a smart contract module. The smart contract module is configured to verify if a transaction complies with predefined rules i.e., Omnibus Budget, and triggers notifications to a designated Single Point of Contact (SPOC) for non-compliance; and automate approval processes and map transaction types to regulatory requirements defined by authorities such as SEBI.
[0028] In another embodiment, the present invention discloses a system further configured to the system is adaptable to user requirements by enabling customizable workflows and procedures.
[0029] In another embodiment, the present invention discloses that the system integrates dynamically with accounting systems configured to provide real-time tracking and recording of related-party transactions.
[0030] In another embodiment, the present invention discloses that the system comprises a transactions monitoring feature configured to compare received transactions with an available limit of the transaction to prevent breaches of financial limits associated with related-party transactions.
[0031] In another embodiment, the present invention discloses that the system further comprises a PAN organization monitoring feature to identify related parties through PAN numbers by enhancing compliance and transparency.
[0032] In another embodiment, the present invention discloses that the system is further configured to generate instant reports, comprising automated report generation for detailed insights into related-party transactions, approvals, and disclosures, SEBI LODR disclosures, Audit committee disclosure report, and Form AOC-2 generation for statutory compliance; and transaction reports and MBP4 registers for comprehensive transaction overviews.
[0033] In another embodiment, the present invention discloses that the system comprising an advanced AI module integrated with the system, wherein the AI module performs contract management and predictive analysis to enhance transaction processing and decision-making.
[0034] In another embodiment, the present invention discloses that the system facilitates the management of transaction approvals by ensuring timely workflows and enhancing the disclosure process through a user-friendly interface.
[0035] In another embodiment, the present invention discloses that the system comprises a dynamic dashboard module, wherein the dashboard module provides interactive visual representations of critical data, including graphs, trends, and key performance indicators associated with the related-party transactions; offering a comprehensive overview of organizational activities.
[0036] In another embodiment, the present invention discloses that the RiiT system integrates with the Ministry of Corporate Affairs (MCA) portal to gather signatory details and information on multiple directorships, track Corporate Identification Numbers (CIN) and Director Identification Numbers (DIN), generate alerts for conflicts of interest involving directors, companies, or subsidiaries.
[0037] In another embodiment, the present invention discloses that the system further comprising Optical Character Recognition (OCR) module integrated with the RiiT system, wherein the OCR module extracts data from declarations uploaded by directors regarding related-party transactions, process the extracted data to reduce manual effort and enhance the accuracy of transaction-related information.
[0038] In yet another embodiment, the present invention discloses a method for managing related-party transactions (RPTs). The method comprising the steps of: configuring a Related-Party Interests Information and Transactions (RiiT) system to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity; integrating the RiiT system with an Enterprise Resource Planning (ERP) system; utilizing the ERP system to perform related-party tagging and manage transaction details, wherein the ERP system sends related-party tagging information to the RiiT system via an application programming interface (API) and receives transaction updates from the RiiT system for financial reporting and analysis, storing data in a data storage unit to ensure that transaction data is accessible and immutable; and automating the processes of recording, managing, and updating related-party transactions and associated data within the RiiT system, thereby ensuring synchronization of information across the ERP system.
BRIEF DESCRIPTION OF DRAWING
[0039] The foregoing summary, as well as the following detailed description of embodiments, is better understood when read in conjunction with the appended drawings. For the purpose of illustrating the disclosure, there is shown in the present document example constructions of the disclosure, however, the disclosure is not limited to the specific methods and device disclosed in the document and the drawing. The detailed description is described with reference to the following accompanying figures.
[0040] Figure 1: illustrates the Venn diagram showing the integration of an ERP system with a RiiT system, in accordance with an embodiment of the present disclosure.
[0041] Figure 2: illustrates the flowchart showing the tagging of new Related Party (RP) in the ERP system, in accordance with an embodiment of the present disclosure.
[0042] Figure 3: illustrates the flowchart showing the workflow of the RiiT system tagging the new Related Party (RP) in the ERP system, in accordance with an embodiment of the present disclosure.
[0043] Figure 4: illustrates the flowchart showing the workflow of the RiiT system without tagging of new Related Party (RP) in ERP system, in accordance with an embodiment of the present disclosure.
[0044] Figure 5: illustrates the block diagram of RiiT system, in accordance with an embodiment of the present disclosure.
[0045] Figure 6: illustrates the block diagram of the integration of the RiiT system with the ERP system, data storage, auditing, reporting, and block-chain network and controls, in accordance with an embodiment of the present disclosure.
[0046] Figure 7: illustrates a flowchart for the method of performing management of related party transaction (RPTs).
[0047] The figures depict various embodiments of the present disclosure for purposes of illustration only. One skilled in the art will readily recognize from the following discussion that alternative embodiments of the structures illustrated herein may be employed without departing from the principles of the disclosure described herein.
DETAILED DESCRIPTION OF THE INVENTION
[0048] Some embodiments of this disclosure, illustrating all its features, will now be discussed in detail. The words "comprising", “having”, and "including," and other forms thereof, are intended to be equivalent in meaning and be open ended in that an item or items following any one of these words is not meant to be an exhaustive listing of such item or items, or meant to be limited to only the listed item or items. It must also be noted that as used herein and in the appended claims, the singular forms "a," "an," and "the" include plural references unless the context clearly dictates otherwise. Although any devices and methods similar or equivalent to those described herein can be used in the practice or testing of embodiments of the present disclosure, the exemplary, devices and methods are now described. The disclosed embodiments are merely exemplary of the disclosure, which may be embodied in various forms.
[0049] Various modifications to the embodiment will be readily apparent to those skilled in the art and the generic principles herein may be applied to other embodiments. However, one of ordinary skill in the art will readily recognize that the present disclosure is not intended to be limited to the embodiments illustrated, but is to be accorded the widest scope consistent with the principles and features described herein.
[0050] Following is a list of elements and reference numerals used to explain various embodiments of the present subject matter.
Reference Numeral Element Description
100 Related party interests information and transactions (RiiT) system
102 ERP system
104 New vendor/customer
106 New related party
[0051] The present invention introduces an innovative related party interests information and transactions (RiiT) system (100) to revolutionize the management of related-party transactions (RPTs) (108) and associated data. The system completely automates the related party transaction (RPT) (108) processes. The RiiT system (100) offers a sophisticated method for controlling, recording, and organizing related-party identification, interests, and transactions, providing a robust RiiT system (100) for initiating conflict of Interest. The RiiT system (100) effortlessly indexes and classifies all related parties, and seamlessly tracks material transactions.
[0052] The RiiT system (100) facilitates the management of approvals, ensuring timely workflows, and enhancing the disclosure process. RiiT system (100) provides a user-friendly interface for controlling RPTs (108) and generating periodic disclosures, allowing for thorough reviews and streamlined audit procedures. The Related-party transaction management system is a secure, and efficient approach.
[0053] In an embodiment, the related parties are explained below in detail:
1. A director or his relative ("relative", with reference to any person, means a member of the same HUF, husband, wife, father (includes step-father), mother (includes the step-mother), son (includes the step-son), son’s wife, daughter, daughter’s husband, brother (includes the step-brother), sister (includes the step-sister))
2. Key Managerial Personnel (KMP) or his relative
3. A firm in which a director, manager, or relative is a partner
4. A private company in which a director or manager or his relative is a member or director
5. A public company in which a director or manager is a director and holds along with his relatives more than 2% of its paid-up capital
6. Any Body Corporate whose Board of Directors, Managing Director or Manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager (NA in cases when these directions are followed in a professional capacity)
7. Any person on whose advice, directions, or instructions a director or manager is required to act (NA in cases when these directions are followed in a professional capacity).
8. A director other than an independent director or key managerial personnel of the holding company or his relative with reference to a company, shall be deemed to be a related party.
9. Any Body Corporate which is—
(A) a holding, subsidiary or an associate company of such company;
(B) a subsidiary of a holding company to which it is also a subsidiary; or
(C) an investing company or the venture of the company;
[0054] The RiiT system (100) comprises technical features that are explained below in detail:
[0055] Dynamic Dashboard: The RiiT system (100) boasts an interactive Dashboard enriched with diverse graphs, empowering users to make informed and swift decisions. The Dashboard provides a visual representation of critical data, offering a comprehensive overview of related-party transactions, trends, and key performance indicators, ensuring efficient decision-making.
[0056] Enterprise Resource Management (ERP) system Integration: The RiiT system (100) integrates with ERP system (102). Users receive instant notifications at the initiation of transactions related to concerned parties. This real-time integration enhances transparency, allowing for proactive management and oversight of related-party activities.
[0057] MCA Portal Integration: The RiiT system (100) integrates with the Ministry of Corporate Affairs (MCA) portal to gather signatory details and information on multiple directorships, ensuring data accuracy and completeness and track the CIN and DIN data. Other than the related party transaction, the RiiT system (100) will pop up the message if there is any conflict of interest between the directors or with the company or its subsidiaries.
[0058] OCR Technology Integration: The inclusion of Optical Character Recognition (OCR) technology increases the efficiency in handling declarations from Directors regarding related-party transactions. Upon uploading these documents, the OCR functionality ensures swift and accurate data extraction, reducing manual efforts and enhancing the overall accuracy of information.
[0059] Comprehensive Interest Reporting: The RiiT system (100) facilitates the meticulous tracking of movements involving Directors and Key Management Personnel (KMP). The Interest reporting feature ensures that all relevant changes and activities are systematically recorded, providing a comprehensive view of the dynamics within the organization's leadership.
[0060] Customizable Approval Metrics: The RiiT system (100) configures the approval process according to user/customer organizational needs with the proposed Approval Metrics feature. Whether dealing with Omnibus approvals or additional budget requirements, the RiiT system (100) provides a customizable approval structure. This flexibility ensures that approval workflows align seamlessly with your specific business processes.
[0061] Ratification-Free Process: Streamline the approval process for last-minute transactions with the Ratification-Free Process feature of the RiiT system (100). This functionality gets approval from the relevant authorities swiftly, eliminating bottlenecks and ensuring that time-sensitive transactions receive the necessary authorization promptly.
[0062] Figure 1 illustrates the Venn diagram of the integration of the ERP system (102) with the RiiT system (100). The data of the ERP system (102) of the customer/user’s organization is exchanged with the RiiT system (100) through an application programming interface (API) Integration. At the onset, when the system is activated, the vendors/customers in client ERP will be synchronized with Related Parties (RP) in the RiiT system (100) and are required to be tagged in ERP as RP. This is represented by the intersection point in Figure 1. Any transactions happening in ERP with vendors or customers that are tagged as RP will be validated with RiiT system (100) via API call to check all the required approvals are in place.
[0063] As shown in Figure 1, the Circle A represents the ERP system (102) when a new vendor or customer (104) is added to the ERP system (102), then it will check the entire list of related parties in Circle B (representing the RiiT system (100) where the list of Related Parties is mentioned), then tagging (represents intersecting area colored in Green) is done in ERP.
[0064] Figure 2 illustrates the flowchart showing the tagging of the new Related Party (RP) (106) in the ERP system (102). If a new related party/customer/ vendor transaction (104) enters the client's ERP system (102), then the Inbound API call will go towards the RiiT system (100). The RiiT system (100) checks the list of related party lists and normal customer lists and compares it with the received transaction. If a new related party transaction is received then the system will tag the newly added related party name into the ERP system (102) of the client.
[0065] Figure 3 illustrates the flowchart showing the workflow/method/procedure of the RiiT system (100), where the RiiT system (100) tagged the new Related Party (RP) (106) in the ERP system (102).
• RP System:
• Tagging related parties in vendor and customer master.
• Transaction Occurs:
• ERP checks if the transaction involves tagged related parties.
o Yes: Send to RiiT
o No: Proceed as usual
• RiiT System (100):
• Validate transaction against the budget.
o Budget Available:
? Record transactions in the transaction table along with Arm’s Length and ordinary course of business which is defined in the approved budget.
o Budget Not Available:
? Send a message to the ERP team to block the transaction
? Additional budget approval required
• Additional Budget Approval (if needed):
• Approve additional budget in RiiT
• Set a new budget
• Allow transaction to proceed
[0066] Figure 4 illustrates the flowchart showing the workflow/method/procedure of the RiiT system (100) without tagging of new Related Party (RP) (106) in the ERP system (102). The related parties will not be tagged in ERP. Instead, all transactions will be sent to RiiT system (100). The RiiT system (100) will identify whether the transaction is related to a party or not. In the case of a related party, further validation of the transaction will be done in RiiT System (100).
[0067] As per the requirement of the user/client/customer the RiiT system is adaptable to change the workflow of tagging and without tagging of the related party (RP) into the ERP system.
[0068] Figure 5 illustrates the block diagram of the RiiT system (100). The Riit system (100) comprises various technical features which are elaborated below in detail.
RiiT Web-Based Application:
Hosting: The RiiT application is hosted on the client’s premises as well as on server.
It follows a web-based architecture, accessible via web browsers from client devices.
ERP System Integration Events:
A) New Client/Vendor (104) Addition:
Event: When a new client or vendor (104) is added to the ERP system (102).
Integration: The ERP system (102) integrates with the RiiT system (100) via API.
Functionality: The integration triggers a check with the RiiT system (100) to validate the new client or vendor (104).
If validated, the client or vendor is tagged into the ERP system's related party list.
B) Related Party Transaction Validation:
Event: Validation of related party transactions (108) within the ERP system.
Integration: The ERP system (102) interacts with the RiiT systems (100) through API to Omnibus Management module.
Functionality: The ERP system (102) validates related party transactions (108) by interfacing with the Omnibus Management module present in the RiiT system (100). This integration ensures budget validation checks and brings all necessary controls.
C) MCA Integration for Related Party Notification:
Integration Method: Utilizing the Director Identification Number (DIN) and Corporate Identification Number (CIN) available in the Ministry of Corporate Affairs (MCA) portal, RiiT establishes an integration mechanism.
Event Trigger: Whenever a new related party, such as a subsidiary or associate company, is added under the directors listed in the MCA portal, a notification event is triggered.
Data Retrieval: RiiT retrieves relevant information about the new related party, including its corporate details and its association with the directors identified through their DIN.
Notification to RiiT: Upon detection of the new related party, RiiT receives a notification in real-time or through periodic data synchronization processes.
[0069] By leveraging the DIN and CIN numbers available in the MCA portal/API’s, RiiT establishes a seamless integration that enables proactive notification and management of any new related parties (106) added under the directors.
[0070] The RiiT system is a solution for the related party by which the user can initiate conflict of interest, index, and classify all Related Parties, and track all material transactions. The system manages and controls related party transactions, generates disclosures, periodically reviews/audits and approvals, workflow, disclosures, and other required things. To enhance the capabilities of the RiiT system, the system is incorporated with advanced AI features like predictive analysis and contract management etc.
[0071] Predictive Analysis: The predictive model of the RiiT system (100) will identify the related party transaction budget based on previous transactions (Txn) and budget data, wherein the historical transaction (Txns) data should be available in the RiiT system. The predictive model of the RiiT system will analyze the historical transaction data and identify the patterns and trends based on factors like a) Transaction Frequency, b) Period, c) Amount, and d) Counterparty relationship. The system will proactively identify the high-risk transactions and based on the predictive analysis, the organization will decide the budget approval for the current financial year.
[0072] Contract Data Extraction and Management: The RiiT system (100) extracts the relevant data from the contracts of related parties and manages data in a centralized repository with RiiT, wherein the contracts and their renewal date are uploaded in the RiiT system (100) in PDF format to capture the data through AI technology. Further, AI technology extracts the relevant data from contracts including dates, involved parties, payment schedule, and amount. In the system, a separate section can be given, where users can search the data about contracts. Automated contract data extraction may reduce manual efforts. The centralized contract repository ensures easy access to contract data.
[0073] In an embodiment, OCR technology of the RiiT system extracts the relevant data from the document (i.e., MBP1) and provides an option to correct and edit the extracted data. The RiiT system (100) includes OCR features to extract the relevant data from the documents. Whenever PDF format documents like MBP1 are uploaded into the RiiT system (100), then the OCR technology extracts the relevant data from the document (i.e., MBP1) such as name, dates, nature of relationship, and shareholding. The system also provides an option to correct and edit data. Automated data extraction reduces manual data entry and errors. The system increased efficiency, productivity, data accuracy, and quality to enhance the decision-making process.
[0074] Figure 6 illustrates the block diagram of the integration of the RiiT system (100) with the ERP system (102), data storage, auditing, reporting, and block-chain network and controls. The RiiT system (100) comprises the related party master, omnibus master, transaction master, and transaction mapping master. The ERP system comprises the related party tagging and transaction details. The blockchain network and control block comprises the smart contract and data block. The RiiT system (100) is interconnected with the ERP system (102) and blockchain network and control block through the application programming interface (API). The data storage block comprises of-chain storage and blockchain storage.
[0075] In an embodiment, the RiiT system (100) provides the feature of the record keeping. Each transaction including transaction type, parties involved, amount, PAN verification, etc. may be recorded on a blockchain ledger as a block. The block-chain may include the transaction details, and fingerprints of the previous block, ensuring data integrity.
[0076] In an embodiment, the RiiT system (100) enhanced the security and data integrity. The RiiT system (100) uses a permissioned blockchain where only authorized users (e.g., user-company, auditors) may add or view transactions. In an embodiment, the permissioned blockchains are distributed ledgers that only allow access to users who have been granted access. This ensures that sensitive financial data is protected from unauthorized access while maintaining transparency
[0077] In an embodiment, the RiiT system (100) provides automated compliance and smart contracts. The RiiT system (100) develops smart contracts to automatically verify if a transaction falls under the Omnibus Budget. If the transaction does not falls under the omnibus budget, then the Riit system (100) may notify to SPOC i.e., the concerned person. The smart contracts may also automate approval processes, reducing manual intervention and errors. Also, the smart contracts may be used for transaction type mapping to SEBI-defined transaction mapping.
[0078] In an embodiment, the RiiT system (100) accepts/rejects the related party transaction (RPT) (108) with or without tagging of related party list in the ERP system (102) as per the requirement of the user.
[0079] In an embodiment, the RiiT system (100) is adaptable and can change the workflow or procedure or method as per the requirements of the users.
[0080] In an embodiment, the RiiT system (100) offers certain benefits which are explained below in detail.
[0081] Dynamic Related Party Information Tracking: User/customer manages related-party information with RiiT systems (100) auto update feature for the related party index/list. This ensures that the user/customer organization's related-party records are consistently and automatically updated, reducing manual workload and maintaining accuracy.
[0082] Capturing the Related-Party Transaction:
[0083] A) Real-time Integration with Accounting System: The RiiT system (100) integrates with your Accounting System, providing real-time tracking of related-party transactions. This integration enhances efficiency, ensuring that transaction data is promptly recorded and readily accessible.
[0084] B) Transactions vs Available Limit Monitoring: The RiiT system (100) incorporates a robust monitoring mechanism for Transactions vs Available Limit. This feature acts as a safeguard, preventing potential breaches and enabling proactive management of financial limits associated with related-party transactions.
[0085] C) PAN Organization Monitoring: The PAN Organization monitoring capability, the system identifies related party through PAN number. This feature adds an extra layer of scrutiny, promoting compliance and transparency in financial dealings.
[0086] The RiiT system (100) generates Instant Reports at user/customer Fingertips:
[0087] A) Automated Report Generation: Generate reports effortlessly with the Automated Report Generation feature of the RiiT system (100). The RiiT system (100) obtains detailed insights into related-party transactions, approvals, and disclosures like Audit committee disclosure report with just a click, saving valuable time and facilitating quick decision-making.
[0088] B) SEBI LODR Disclosure: Comply with regulatory requirements seamlessly using the system's capability to generate SEBI LODR (Listing Obligations and Disclosure Requirements) disclosures.
[0089] C) Form AOC-2: The system streamlines the generation of Form AOC-2, making the process quick and error-free. This feature ensures compliance with statutory obligations and enhances the efficiency of related-party transaction reporting.
[0090] D) Transaction Report and MBP4: The system access detailed Transaction Reports and MBP4 (Register of contracts or arrangements in which directors are interested). These reports provide a comprehensive overview of related-party transactions, empowering stakeholders with valuable information for decision-making.
[0091] Streamlined Omnibus Approval Process:
[0092] A) Real-time Accounting System Integration: The real-time integration with user/customers Accounting System for Omnibus Approval processes. This ensures that approval workflows are seamlessly integrated with actual financial data, reducing delays and enhancing accuracy.
[0093] B) PAN Organization Monitoring for Omnibus Approvals: The PAN Organization Monitoring feature extends to Omnibus Approvals, providing a comprehensive view of related-party transactions even in complex approval scenarios.
[0094] In an embodiment, the present disclosure incorporates advanced features, so the Related-Party Transaction Management System offers a holistic solution, enhancing efficiency, transparency, and compliance in the management of related-party transactions.
[0095] In an embodiment, the ultimate goal of the RiiT system (100) is to help all aspects like governance, control, and prevention, etc. of anything which is pertaining to related party transactions, conflict of interest, basically the conflict of interest between directors, between directors and the company, and between all the related parties.
[0096] In an embodiment, the RiiT system (100) proactively preventing any kind of unauthorised transactions including RPTs.
[0097] The RiiT system (100) offers a unique value proposition through its status as a one-stop solution coupled with extensive domain knowledge. The following key features distinguish proposed RiiT system (100):
[0098] A) Holistic Related-Party Transaction Management:
[0099] a) Complete Domain Knowledge: The system understands the related-party transactions and ensures that the RiiT system (100) resolves the unique challenges and nuances within this domain.
[00100] b) Real-time Information Updates from MCA: The system captures the latest information updates from the Ministry of Corporate Affairs (MCA) regarding Director outside relationships. This features ensures that your organization maintains an up-to-date and accurate record of relevant data.
[00101] B) Efficient Automation and ERP Integration:
[00102] a) ERP Integration: The system achieves complete automation through seamless integration with Enterprise Resource Planning (ERP) systems. The RiiT system (100) harmonizes with the customer/user's existing infrastructure, providing a smooth and efficient workflow.
[00103] b) Streamlined Record, Manage, and Control Processes: RiiT system (100) empowers organizations to efficiently record, manage, and control the Related Party Index and Transactions. With built-in approvals, notifications, and automated report generation, the entire process is streamlined for maximum efficiency.
[00104] c) Customizable Reports for Statutory Compliance: Generate reports in the required format effortlessly, ensuring compliance with SEBI disclosure and other statutory reporting requirements. The system's adaptability ensures that the user/customer’s organization meets regulatory standards with precision.
[00105] C) Mitigation of Risks and Enhanced Accuracy:
[00106] a) Reduced Business and Reputation Risks: The RiiT system (100) acts as a risk mitigator, minimizing the potential threats to both business and reputation associated with related-party transactions. By incorporating advanced features, it provides a secure and compliant environment.
[00107] b) Increased Accuracy and Time Savings: Experience a significant boost in accuracy and efficiency. RiiT system (100) eliminates manual intervention, reducing the chances of human error. This not only enhances the accuracy of data but also saves valuable time for your corporate financial team.
[00108] c) Elevated Efficiency: RiiT system (100) contributes to an increase in the efficiency of corporate financial teams by automating tedious processes and providing a centralized RiiT system (100) for related-party transaction management.
[00109] Comprehensive Functionalities of RiiT Dashboard:
[00110] In an embodiment, the multiple functionalities encapsulated within the RiiT Dashboard, offer a centralized and user-friendly interface for efficient related-party transaction management:
[00111] Related Party Index: The system accesses a comprehensive index detailing related parties, ensuring a systematic and organized overview of entities involved in related-party transactions.
[00112] Transaction Information: The system obtains detailed information on approved transactions, facilitating transparency and enabling stakeholders to track and manage related-party dealings effectively.
[00113] Exemptions Overview: The system navigates through a dedicated section outlining exemptions, providing insights into specific cases exempted from standard procedures.
[00114] Materiality Threshold Monitoring: The system monitors materiality thresholds, set at one thousand crore or ten per cent of the annual consolidated turnover as per the last audited financial statements, to ensure compliance with predefined limits and regulatory requirements.
[00115] Material Modification Policy: Access information regarding the Material Modification Policy, providing clarity on procedures and guidelines governing modifications to related-party transactions.
[00116] Audit Committee Workflow: Facilitate seamless interaction with the Audit Committee by utilizing a dedicated login and workflow system, ensuring swift and effective collaboration.
[00117] Outside Experts Collaboration: Engage with external experts through a specialized login, facilitating the submission of opinions, reports, and certifications to enhance the decision-making process.
[00118] Omnibus Approvals Management: Streamline the process for omnibus approval for related party transactions, ensuring efficiency and compliance through a dedicated Omnibus Approvals feature.
[00119] Approved Transactions Index: Access a comprehensive index showcasing approved transactions, providing an organized overview for reference and analysis.
[00120] Disclosure Management: Efficiently manage and generate disclosures required under Regulation 23 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. All material-related party transactions and subsequent material modifications as defined by the audit committee shall require prior approval of the shareholders through resolution.
[00121] In an embodiment, the RiiT system (100) provides a unique blend of automation and integration, offering a comprehensive approach.
[00122] Automated Data Consolidation: Streamlines the process of consolidating related-party transaction data, eliminating the prevalent issue of mismatched and non-consolidated numbers. The automated system ensures accuracy and coherence in financial records.
[00123] Integration with ERP system (102): The system seamlessly integrates with existing ERP systems (102). This eliminates the need for maintaining separate flags and enhances the overall efficiency of related-party transaction management within the organization.
[00124] Real-Time Tracking and Monitoring with Notification: The solution enables real-time tracking of ratification, over-budget transactions, and non-monitored transactions. By providing timely alerts and notifications, it prevents delays in identifying and addressing potential issues, thereby minimizing financial risks.
[00125] Error Mitigation and Risk Reduction: The automation in the system reduces manual errors. This not only enhances the overall accuracy of data but also mitigates the risk associated with relying on a manual process. The system acts as a safeguard against potential financial and reputational threats.
[00126] Regulatory Compliance and Reporting: The solution is designed to keep pace with evolving regulatory requirements. It provides built-in compliance checks and generates comprehensive reports, ensuring that the organization remains aligned with regulatory standards and reduces the likelihood of legal challenges.
[00127] Approval metrics: In the RiiT system (100), approval can be taken from the directors on Omnibus and specific transactions
[00128] In an embodiment, a system for managing related-party transactions (RPTs) is illustrated. The system comprising a RiiT system (100) configured to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity, integrated with an Enterprise Resource Planning (ERP) (102), and the Enterprise Resource Planning (ERP) system (102) coupled with the RiiT system (100), configured to perform related-party tagging and manage transaction details, wherein the ERP system (102) utilizes an application programming interface (API) to send related-party tagging information to the RiiT system (100) and receive transaction updates from the RiiT system (100) for financial reporting and analysis.
[00129] In an embodiment, the RiiT system (100) is configured to accept or reject related-party transactions (RPTs) with or without tagging of the related party list in the ERP system (102) based on user-defined criteria.
[00130] In an embodiment, the RiiT system (100) includes an auto-update feature configured to maintain a dynamic related-party index or list, by providing accuracy and reducing manual workload.
[00131] In an embodiment, the RiiT system (100) is configured to record transaction data, including transaction type, parties involved, and amounts, on a blockchain ledger as blocks.
[00132] In an embodiment, the block chain network configured to allow access to authorized users for viewing and adding transactions.
[00133] In an embodiment, the blockchain network comprising a smart contract module and a data block, wherein the smart contract module is configured to perform compliance management to verify if a transaction complies with predefined rules.
[00134] In an embodiment, the smart contract module is configured to: verify if a transaction complies with predefined rules i.e., Omnibus Budget, and triggers notifications to a designated Single Point of Contact (SPOC) for non-compliance; and automate approval processes and map transaction types to regulatory requirements defined by authorities such as SEBI.
[00135] In an embodiment, the system (100) is adaptable to user requirements by enabling customizable workflows and procedures.
[00136] In an embodiment, the system (100) may integrates dynamically with accounting systems configured to provide real-time tracking and recording of related-party transactions.
[00137] In an embodiment, the system (100) may comprises a transactions monitoring feature configured to compare received transactions with an available limit of the transaction to prevent breaches of financial limits associated with related-party transactions.
[00138] In an embodiment, the system (100) may comprises a PAN organization monitoring feature to identify related parties through PAN numbers by enhancing compliance and transparency.
[00139] In an embodiment, the system (100) is further configured to generate instant reports, comprising automated report generation for detailed insights into related-party transactions, approvals, and disclosures, SEBI LODR disclosures, Audit committee disclosure report, Form AOC-2 generation for statutory compliance, and transaction reports and MBP4 registers for comprehensive transaction overviews.
[00140] In an embodiment, the system may comprising an advanced AI module integrated with the system (100), wherein the AI module performs contract management and predictive analysis to enhance transaction processing and decision-making.
[00141] In an embodiment, the system (100) may facilitates the management of transaction approvals by ensuring timely workflows and enhancing the disclosure process through a user-friendly interface.
[00142] In an embodiment, the system (100) may comprises a dynamic dashboard module, wherein the dashboard module provides interactive visual representations of critical data, including graphs, trends, and key performance indicators associated with the related-party transactions and offering a comprehensive overview of organizational activities.
[00143] In an embodiment, the RiiT system (100) may integrates with the Ministry of Corporate Affairs (MCA) portal to gather signatory details and information on multiple directorships, track Corporate Identification Numbers (CIN) and Director Identification Numbers (DIN), generate alerts for conflicts of interest involving directors, companies, or subsidiaries.
[00144] In an embodiment, the system (100) comprising the Optical Character Recognition (OCR) module integrated with the RiiT system (100), wherein the OCR module extracts data from declarations uploaded by directors regarding related-party transactions and process the extracted data to reduce manual effort and enhance the accuracy of transaction-related information.
[00145] In an embodiment, a method for managing related-party transactions (RPTs) is illustrated. The method comprising the steps of configuring a Related-Party Interests Information and Transactions (RiiT) system (100) to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity, integrating the RiiT system (100) with an Enterprise Resource Planning (ERP) system (102), utilizing the ERP system (102) to perform related-party tagging and manage transaction details, wherein the ERP system (102) sends related-party tagging information to the RiiT system (100) via an application programming interface (API) and receives transaction updates from the RiiT system (100) for financial reporting and analysis, storing data in a data storage, ensuring that transaction data is accessible and immutable, and automating the processes of recording, managing, and updating related-party transactions and associated data within the RiiT system (100), thereby ensuring synchronization of information across the ERP system (102).
[00146] Figure 7 illustrates a flowchart for a method (700) for managing related-party transactions (RPTs), as per an embodiment. The steps in method (700) are not restrictive, allowing for any combination of steps or alternative methods. The method may be implemented through hardware, software, firmware, or any combination thereof. Here, for clarity, the following embodiments describe method (700) as implemented within system.
[00147] At block 702, the system is configuring a Related-Party Interests Information and Transactions (RiiT) system (100) to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity
[00148] At block 704, the system is integrating the RiiT system (100) with an Enterprise Resource Planning (ERP) system (102) and a blockchain network
[00149] At block 706, the system is utilizing the ERP system (102) to perform related-party tagging and manage transaction details, wherein the ERP system (102) sends related-party tagging information to the RiiT system (100) via an application programming interface (API) and receives transaction updates from the RiiT system (100) for financial reporting and analysis
[00150] At block 708, the system is storing data in a data storage unit configured for both off-chain storage and blockchain storage, ensuring that transaction data is accessible and immutable.
[00151] At block 710, the system is automating the processes of recording, managing, and updating related-party transactions and associated data within the RiiT system (100), thereby ensuring synchronization of information across the ERP system (102) and the blockchain network.
[00152] With respect to the use of substantially any plural and/or singular terms herein, those having skill in the art can translate from the plural to the singular and/or from the singular to the plural as is appropriate to the context and/or system. The various singular/plural permutations may be expressly set forth herein for the sake of clarity.
[00153] Although implementations for the related party transactions (RPTs) system have been described in language specific to structural features and/or methods, it is to be understood that the appended claims are not necessarily limited to the specific features described. Rather, the specific features are disclosed as examples of implementation for the related party transactions (RPTs) system.
,CLAIMS:
1. A system for managing related-party transactions (RPTs), comprising:
a RiiT system (100) configured to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity, integrated with an Enterprise Resource Planning (ERP) (102); and
the Enterprise Resource Planning (ERP) system (102) coupled with the RiiT system (100), configured to perform related-party tagging and manage transaction details, wherein the ERP system (102) utilizes an application programming interface (API) to send related-party tagging information to the RiiT system (100) and receive transaction updates from the RiiT system (100) for financial reporting and analysis.

2. The system as claimed in claim 1, wherein the RiiT system (100) is configured to accept or reject related-party transactions (RPTs) with or without tagging of the related party list in the ERP system (102) based on user-defined criteria.

3. The system as claimed in claim 1, wherein the RiiT system (100) includes an auto-update feature configured to maintain a dynamic related-party index or list, by providing accuracy and reducing manual workload.

4. The system as claimed in claim 1, wherein the RiiT system (100) is configured to record transaction data, including transaction type, parties involved, and amounts, on a blockchain ledger as blocks.

5. The system as claimed in claim 1, comprising a block chain network configured to allow access to authorized users for viewing and adding transactions.

6. The system as claimed in claim 5, wherein the blockchain network comprising a smart contract module and a data block, wherein the smart contract module is configured to perform compliance management to verify if a transaction complies with predefined rules.
7. The system as claimed in claim 6, wherein the smart contract module is configured to:
verify if a transaction complies with predefined rules i.e., Omnibus Budget, and triggers notifications to a designated Single Point of Contact (SPOC) for non-compliance; and
automate approval processes and map transaction types to regulatory requirements defined by authorities such as SEBI.

8. The system as claimed in claim 1, wherein the system (100) is adaptable to user requirements by enabling customizable workflows and procedures.

9. The system as claimed in claim 1, wherein the system (100) integrates dynamically with accounting systems configured to provide real-time tracking and recording of related-party transactions.

10. The system as claimed in claim 1, wherein the system (100) comprises a transactions monitoring feature configured to compare received transactions with an available limit of the transaction to prevent breaches of financial limits associated with related-party transactions.

11. The system as claimed in claim 1, further comprises a PAN organization monitoring feature to identify related parties through PAN numbers by enhancing compliance and transparency.

12. The system as claimed in claim 1, further configured to generate instant reports, comprising:
• automated report generation for detailed insights into related-party transactions, approvals, and disclosures;
• SEBI LODR disclosures;
• Audit committee disclosure report;
• Form AOC-2 generation for statutory compliance; and
• transaction reports and MBP4 registers for comprehensive transaction overviews.

13. The system as claimed in claim 1, further comprising an advanced AI module integrated with the system (100), wherein the AI module performs contract management and predictive analysis to enhance transaction processing and decision-making.

14. The system as claimed in claim 1, wherein the system (100) facilitates the management of transaction approvals by ensuring timely workflows and enhancing the disclosure process through a user-friendly interface.

15. The system as claimed in claim 1, further comprises a dynamic dashboard module, wherein the dashboard module:
• provides interactive visual representations of critical data, including graphs, trends, and key performance indicators associated with the related-party transactions;
• offering a comprehensive overview of organizational activities.

16. The system as claimed in claim 1, wherein the RiiT system (100) integrates with the Ministry of Corporate Affairs (MCA) portal to:
• gather signatory details and information on multiple directorships;
• track Corporate Identification Numbers (CIN) and Director Identification Numbers (DIN);
• generate alerts for conflicts of interest involving directors, companies, or subsidiaries.

17. The system as claimed in claim 1, further comprising Optical Character Recognition (OCR) module integrated with the RiiT system (100), wherein the OCR module:
• extracts data from declarations uploaded by directors regarding related-party transactions;
• process the extracted data to reduce manual effort and enhance the accuracy of transaction-related information.
18. A method for managing related-party transactions (RPTs), comprising the steps of:
configuring a Related-Party Interests Information and Transactions (RiiT) system (100) to ensure that every transaction is properly tagged, recorded, monitored, and mapped to the appropriate entity;
integrating the RiiT system (100) with an Enterprise Resource Planning (ERP) system (102);
utilizing the ERP system (102) to perform related-party tagging and manage transaction details, wherein the ERP system (102) sends related-party tagging information to the RiiT system (100) via an application programming interface (API) and receives transaction updates from the RiiT system (100) for financial reporting and analysis;
storing data in a data storage, ensuring that transaction data is accessible and immutable; and
automating the processes of recording, managing, and updating related-party transactions and associated data within the RiiT system (100), thereby ensuring synchronization of information across the ERP system (102).