SEBI’s Revises Disclosure Framework for Related Party Transactions

On 13-10-2025, the Securities and Exchange Board of India (SEBI) circulated a notification titled “Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions (‘RPTs’)”. This notification marks a significant shift in the compliance landscape for listed entities, aiming to streamline disclosures while preserving transparency and governance integrity. This circular came into effect immediately.

Key Takeaways:

1. Related Party Transactions involve dealings between entities with a preexisting business relationship, which may pose conflicts of interest. These transactions are critical to corporate governance and require careful oversight to prevent misuse of company resources.

2. To enhance transparency and protect shareholder interests, the SEBI has mandated specific disclosures under the Listing Obligations and Disclosure Requirements (‘LODR’) Regulations, now standardized through the Industry Standards on Minimum Information for RPT Approval.

3. SEBI modified the RPT disclosure norms, following recommendations from the Advisory Committee on Listing Obligations and Disclosures (‘ACLOD’) and public feedback on a consultation paper released in August 2025.

4. The Board approved these relaxations in its 211th meeting held on 12-9-2025, aiming to streamline compliance for listed entities while maintaining governance standards.

5. Under the revised framework, listed entities must provide the following minimum information to the Audit Committee when seeking approval for an RPT:

   • Type, material terms, and particulars of the transaction

   • Name of the related party and nature of relationship

   • Tenure and value of the transaction

   • Percentage of annual consolidated turnover impacted

   • For loans/investments: source of funds, indebtedness details, terms, security, and purpose of utilization

   • Justification for the transaction

   • Valuation or external report, if relied upon

   • Voluntary disclosure of counter-party turnover impact

   • Any other relevant information

6. When shareholder approval is required, the explanatory statement in the notice will include:

   • Summary of information provided to the Audit Committee

   • Justification for the transaction

   • Loan/investment details

   • Statement on availability of valuation/external reports via registered email

   • Voluntary disclosure of counter-party turnover impact

   • Any other relevant information

7. To ease compliance, SEBI has introduced thresholds for reduced disclosures:

   • Transactions with a value of ₹1 crore or less are fully exempt from minimum disclosure requirements.

   • Transactions up to ₹10 crore or 1% of annual consolidated turnover require disclosures in the Annexure-13A format.

   • Transactions exceeding ₹10 crore or 1% of turnover must comply with the full RPT Industry Standards.