Briefly explain the role of due diligence report in helping to curb occurrence of related party transactions.

Section 188 (1) of Companies Act, 2013 provides that except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to (a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials, services or property; (f) such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof, of the company. Hence Due Diligence Report of such transactions has its own importance. Due diligence report is system of curbing related party transactions from occurring. Audit committee should seek a due diligence report with regard to all proposed material transactions which should highlight potential conflict of interest. Therefore, the companies should have well articulated policies specifying that transactions beyond a certain threshold limits and transactions of certain nature would require a pre-clearance from the audit committee.