SEBI has issued a consultation paper titled ‘Consultation Paper on Amendments To Provisions Relating To Related Party Transactions Under SEBI (LODR) Regulations, 2015 And Circulars Thereunder’ (“Consultation Paper”) dated 4th August 2025 proposing amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) and related circulars to ease compliance requirements for listed entities, particularly in relation to Related Party Transactions (“RPTs”). The proposal is based on the recommendations of the Advisory Committee on Listing Obligations and Disclosures (ACLOD) and internal SEBI deliberations.
Key proposals include:
1. Scale-based Thresholds for Material RPTs:
Current rule: RPTs are ‘material’ if the value if the transaction exceeds ₹1,000 crore or 10% of consolidated turnover, whichever is lower.
Proposed: Scale-based system based on the turnover of the listed entity:
| Annual Consolidated Turnover | Proposed Threshold |
|---|---|
| Up to ₹20,000 crore | 10% of turnover |
| ₹20,001 – 40,000 crore | ₹2,000 crore + 5% of turnover above ₹20,000 crore |
| Above ₹40,000 crore | ₹3,000 crore + 2.5% of turnover above ₹40,000 crore, capped at ₹5,000 crore |
Aim: This approach would ensure that the increase in materiality threshold is proportionate to increase in turnover of the listed entity thereby ensuring appropriate number of RPT being categorised as material and thus reducing compliance for listed entities with larger turnover.
(The proposed threshold was back tested with RPT data for the FYs 2023-24 and 2024-25 of top 100 listed entities on NSE based on turnover which showed 60% fewer RPTs would require shareholder approval.)
2.Harmonised Thresholds for Subsidiaries:
The consultation paper proposes to address the issue where a transaction undertaken by a subsidiary (where the subsidiary of a listed entity is a party, but the listed entity is not a party)
may exceed the material RPT threshold for the listed entity but not the 10% standalone turnover threshold for the subsidiary.
It is proposed to harmonise the approval requirements under Regulation 23 (2) with the proposed scale-based thresholds in Regulation 23 (1) as follows:
A. For subsidiaries with audited financial statements for at least one year:
In the event of RPT being above ₹1 crore, prior approval of the Audit Committee of a listed entity would be required if the transaction value exceeds the lower of:
– 10% of the subsidiary’s standalone turnover (based on the last audited financials), or
– The listed entity’s applicable scale-based materiality threshold.
B. For subsidiaries without at least one year’s audited financial statements:
The consultation paper proposes using 10% of the subsidiary’s standalone net worth (or, in cases of negative net worth, the aggregate of paid-up share capital and securities premium)
as one of the thresholds, alongside the listed entity’s scale-based threshold, with the lower of the two applying. Both calculations would be based on figures certified by a practicing chartered accountant, dated not more than 3 months before approval is sought.
This change is intended to ensure consistent oversight for significant transactions by subsidiaries, regardless of whether they meet the subsidiary specific turnover test and to maintain parity between subsidiaries with and without financial track records.
3.Relaxation in Minimum Information Disclosures:
A. The Consultation Paper proposes to enhance the current ₹1 crore exemption threshold for applicability of detailed RPT Industry Standards (as per Master Circular and SEBI’s 26th June 2025 circular – SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/93).
B. Under the proposal, where the value of RPT(s) (whether individually or aggregated in a financial year) does not exceed 1% of the annual consolidated turnover or ₹10 crore, whichever is lower, the paper proposes that set of disclosures may be limited and has suggested a format in Annexure-1 to the draft circular provided in the Consultation Paper (in Pg. No.30).
C. This reduced disclosure format would require fewer disclosures than the RPT Industry Standards (which requires an exhaustive list of disclosures). It is however proposed to retain the ₹1 crore absolute exemption (as specified in Para 1. (3) (c) of the RPT Industry Standards) for very small transactions where there are no disclosure requirements. Thus, the Consultation Paper proposes respective amendments to Paragraph 4 under Part A and Paragraph 6 under Part B of Section III-B of the Master Circular.
4.Validity of Shareholder Omnibus Approvals::
A. The Consultation Paper proposes to formally incorporate into Regulation 23 (4) of the LODR, the existing provision on validity of shareholder omnibus approvals for RPTs provided under the Master Circular for compliance with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 by listed entities (“Master Circular”) dated November 11, 2024 (SEBI/HO/CFD/PoD2/CIR/P/0155).
B. Specifically, omnibus approvals obtained in an annual general meeting (“AGM”) would be valid until the date of the next AGM (subject to a maximum of 15 months, taking into consideration potential extensions of time which may be sought for by companies under Section 96 of the Companies Act, 2013), while omnibus approvals granted in any other general meeting would be valid for up to one year.
C. This amendment is intended to align the LODR Regulation text with that of the Master Circular and ensure clarity for listed entities and shareholders.
5. Clarifications to Applicability of RPT Provisions:
The Consultation Paper proposes two clarifications regarding applicability of RPT provisions under LODR Regulations:
(i) Amendment to definition of ‘related party transaction’:Proposed modification to proviso (e) of Regulation 2 (1) (zc) of LODR Regulation to align with the definition of ‘related party’ by replacing “employees” with “directors or key managerial personnel(s) of the listed entity or its subsidiary, or their relatives” for the purpose of exempting certain retail purchases from being treated as RPTs.
(ii) Scope of exemption under Regulation 23 (5): Proposed to add an explanation under Regulation 23 (5) clarifying that the exemptions for transactions between a holding company and its wholly owned subsidiary apply only where the holding company is a listed company, and that the subsidiary’s accounts are consolidated with those of the listed holding company and presented to its shareholders.
Through these proposals, SEBI aims to streamline RPT compliance, introduce proportional thresholds, ease disclosure requirements for relatively low-value transactions, and remove ambiguities in interpretation. If implemented, the changes would reduce compliance burden particularly for large-cap companies while maintaining governance safeguards and ensuring that significant transactions continue to receive appropriate oversight from audit committees and shareholders.
