The Securities and Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 11(1) and Section 11(A) of the Securities and Exchange Board of India Act, 1992 read with Regulation 101 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), vide Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/135,[1] dated October 13, 2025, (“Circular”) clarified the minimum information to be provided to the Audit Committee and shareholders for the approval of Related Party Transactions (“RPTs”).
Key Changes and Relaxations:
1. Exemption Threshold: Listed entities shall now be allowed to provide reduced information to the Audit Committee and shareholders for RPTs that do not exceed a threshold of:
- 1% (One Percent) of the annual consolidated turnover of the listed entity (as per the last audited financial statements); or
- INR 10 Crores (Indian Rupees Ten Crores Only), whichever is lower.
For transactions falling below this threshold, only minimum information, as specified in Annexure-13A of the Circular, needs to be provided.
2. RPTs Not Exceeding INR 1 Crore: For transactions with related parties that, individually or in aggregate, do not exceed INR 1 Crore (Indian Rupees One Crore Only) in a financial year (including those approved via ratification), the minimum information requirements specified in the RPT Industry Standards will not be applicable.
3. Audit Committee Approval: The Audit Committee must still be provided with the information outlined in the RPT Industry Standards for any RPT, subject to the exemptions mentioned above.
4. Shareholder Approval (Explanatory Statement): The explanatory statement in the notice sent to shareholders, seeking approval for any RPT, must include the information specified in the RPT Industry Standards. The relaxation applies where the RPT transaction, when combined with previous transactions in the same financial year, does not exceed the threshold of 1% (One Percent) of consolidated annual turnover or INR 10 Crores (Indian Rupees Ten Crores Only), whichever is lower.
5. RPT Industry Standards: The exemption threshold of INR 1 Crore (Indian Rupees One Crore Only) for RPTs, as specified in the RPT Industry Standards (Para 3(c)), will continue to apply.
6. Compliance Timeline: This modification to the Master Circular and the SEBI Circular will be effective immediately. Listed entities are required to ensure compliance with the RPT Industry Standards and the modified provisions of Part A and Part B of Section III-B of the Master Circular, effective from the issuance date.
7. Action for Stock Exchanges: Stock Exchanges are advised to circulate the contents of this circular to their listed entities to ensure proper compliance.
[1]https://www.sebi.gov.in/legal/circulars/oct-2025/minimum-information-to-be-provided-to-the-audit-committee-and-shareholders-for-approval-of-related-party-transactions_97281.html