Authored by Anish V
SEBI has notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2025 (“Amendment Regulations”), via Notification No. F. No. SEBI/LAD-NRO/GN/2025/273, dated 18 November 2025, with most provisions effective immediately and certain sub-regulations coming into force after 30 days.
This amendment marks a notable strengthening of related party transaction (“RPT”) governance, introduces a more calibrated approach to materiality, and enhances disclosure obligations for listed entities.
Key Changes Introduced by the Amendment Regulations
1. Broadened Definition of “Related Party Transaction”
Regulation 2(1)(zc) has been amended to expand the scope of related parties. Now, “directors or key managerial personnel of the listed entity or its subsidiary, and their relatives” are explicitly captured. This change strengthens oversight by ensuring that transactions involving senior management and their familial connections fall under RPT regulation.
2. New Materiality Framework (Schedule XII)
The earlier fixed cap of “₹1,000 crore or 10% of the annual consolidated turnover (whichever is lower)” under Regulation 23(1) has been replaced. SEBI has introduced Schedule XII, which prescribes turnover-linked thresholds:
a. Up to ₹20,000 crore: 10% of consolidated turnover
b. ₹20,000–₹40,000 crore: ₹2,000 crore + 5% of turnover above ₹20,000 crore
c. Above ₹40,000 crore: ₹3,000 crore + 2.5% of turnover above ₹40,000 crore (but capped at ₹5,000 crore)
The framework ensures that “material” RPTs are determined more proportionately based on the size of the listed entity.
3. Stricter Audit-Committee Approval for Subsidiary-Level RPTs
For RPTs where a subsidiary is involved but the listed parent is not, prior approval from the audit committee of the listed entity is required if both the following conditions are satisfied:
a. The value exceeds ₹1 crore, and
b. The value exceeds 10% of the subsidiary’s standalone turnover, or the materiality threshold under the listed entity’s Schedule XII, whichever is lower.
If the subsidiary does not have audited financials for at least one year, the threshold is based on 10% of paid-up share capital + securities premium, calculated on a date not older than three months. Furthermore, the amendment clarifies through an explanation that the term ‘holding company’ in this context refers to a listed holding company.
4. Validity of Shareholder Omnibus Approvals
The amendment clarifies the validity of omnibus approvals as follows:
a. For approvals granted in an AGM: validity is extended until the next AGM held as per Section 96 of the Companies Act, 2013 (or applicable statute).
b. For approvals granted in any other general meeting (not AGM): the validity is capped at one year.
5. Enhanced Disclosure & Annual Report Requirements
This amendment modifies Regulation 53 to the effect that the annual report must now include disclosures as per the relevant statute under which the listed entity is constituted, not just under the Companies Act, 2013.
The listed entity must:
a. Submit the annual report to stock exchanges, debenture trustees, and publish it on its website on or before dispatch or statutory submission date.
b. If there are post-AGM changes to the report, the revised report (with explanations) must be filed within 48 hours.
6. Improved Handling of Non-Convertible Securities (NCS) Disclosures
Under Regulation 58, listed entities must send a letter to holders of non-convertible securities who have not registered their email address, containing the exact web-link to the complete annual report and, optionally, a static QR code to that report.
The amendment introduces a new sub-regulation (1A) mandates sending of documents within timelines specified under Section 136 of the Companies Act, 2013, or the applicable statute. If no timeline is prescribed, then dispatch/publication must happen on or before the scheduled dispatch/submission date.
These amendments enhance transparency in RPTs by aligning materiality thresholds with the scale of the listed entity, rather than using rigid monetary caps. The stricter audit committee oversight on subsidiary-level RPTs reduces risks of indirect related-party arrangements circumventing scrutiny. By tightening the validity of omnibus approvals, SEBI ensures more regular shareholder oversight. The improved reporting (including timely revision post-AGM) and better communication to NCS holders strengthen investor protection and access to information. Overall, the regulatory shift reflects SEBI’s focus on proportionate governance, risk mitigation, and disclosure clarity for listed entities.
