The Securities and Exchange Board of India (“SEBI”), in exercise of the powers conferred under Section 11(1) and 11Aof the Securities and Exchange Board of India Act, 1992 read with Regulation 101 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), vide Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/93,[1] dated June 26, 2025, revised the Industry Standards on the ‘Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions (“RPTs”).
I. Background
- Regulation 23(2), 23(3), and 23(4) of the LODR Regulations mandated prior approval of RPTs by the Audit Committee and shareholders (if material).
- SEBI’s Master Circular dated November 11, 2024, outlined the information required to be presented for such approvals.
- Based on feedback from stakeholders, SEBI has now revised the format and content requirements for these disclosures.
- TheIndustry Standards Forum (ISF) was constituted with representatives from ASSOCHAM, FICCI, and CII, under the aegis of stock exchanges and in consultation with SEBI and has revised Industry Standards titled ‘Minimum Information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions.’
II. Key Revisions in Disclosure Requirements
- For Audit Committee Approvals: Listed entities shall be required to submit proposals for RPTs to the Audit Committee in the format specified under the revised Industry Standards. This replaces the earlier format prescribed in Paragraph 4 of Part A, Section III-B of the SEBI Master Circular.
- For Shareholder Approvals: Notices sent to shareholders seeking approval for RPTs shall now include the revised information as part of the explanatory statement. This requirement is in addition to those under the Companies Act, 2013. Paragraph 6 of Part B, Section III-B of the Master Circular has been amended to reflect this.
III. Implementation Timeline: The effective date for implementation of the revised Industry Standards is September 1, 2025. Earlier timelines of April 01, 2025, and July 01, 2025 (as per SEBI’s previous circulars) have been superseded by this circular.
IV. Supersession of Previous Circulars: This circular supersedes:
- Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/18 dated February 14, 2025
- Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/37 dated March 21, 2025
[1]https://www.sebi.gov.in/legal/circulars/jun-2025/industry-standards-on-minimum-information-to-be-provided-to-the-audit-committee-and-shareholders-for-approval-of-related-party-transactions-_94809.html