#SEBI Update: Related Party Transaction
R.V. SEKAR
![R.V. SEKAR]()
R.V. SEKAR
COMPLIANCE EXPERT , LODR SPECIALIST ,CONTRIBUTOR IN FEMA , INSOLVENCY LAWS AND CORPORATE LAWS
SEBI has issued a Circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/18 (Dated: February 14, 2025
It speaks about Industry Standards on “Minimum Information to be Provided for Review of the Audit Committee and Shareholders for Approval of a Related Party Transaction (RPT).”
Regulation 23(2), (3), and (4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations)
SEBI mandates prior approval of RPTs by the audit committee and shareholders (if material).
SEBI Master Circular dated November 11, 2024,
Specifies the required information to be placed before these approving bodies.
Introduction of Industry Standards:
The Industry Standards Forum (ISF), comprising representatives from ASSOCHAM, FICCI, and CII, has formulated minimum information standards for RPT approval.
- These standards were developed under the aegis of Stock Exchanges and in consultation with SEBI.
Mandatory Compliance with Industry Standards:
- Listed entities must adhere to these industry standards while submitting RPTs for approval.
- This ensures compliance with Part A and Part B of Section III-B of the Master Circular read with Regulation 23(2), (3), and (4) of LODR Regulations.
Amendments to the Master Circular (Effective from April 1, 2025):
o Part A, Paragraph 4:
- The listed entity shall provide the audit committee with the information as per the Industry Standards when presenting an RPT for review and approval.
o Part B, Paragraph 6:
- The notice sent to shareholders seeking approval for an RPT shall include, in addition to Companies Act, 2013 requirements, the information specified in the Industry Standards as part of the explanatory statement.
Key Changes Introduced
- Creation of “Industry Standards” for RPT approval in consultation with SEBI.
- Mandatory adherence to these Industry Standards by listed entities.
- Modification of the Master Circular to incorporate these Industry Standards.
- Explicit requirement to include these details in both audit committee reviews and shareholder notices.
- Effective date: April 1, 2025.
Courtesy : SSAS And Associates LLP