Pursuant to the feedback and requests received from various stakeholders, SEBI has issued circular whereby The Industry Standards Forum (‘ISF’), in consultation with SEBI, developed an industry standards[1] to specify the minimum information required for Audit Committee and Shareholder review of Related Party Transactions (‘RPT’s).
The aforesaid circular ensures compliance with Part A and Part B of Section III-B of the Master Circular dated 11 November, 2024 read with Regulation 23(2), (3) and (4) of LODR Regulations. The finalised revised Industry Standards are structured as:
- Part A: Captures the minimum information of the proposed RPT and is applicable to all RPTs.
- Part B: Applicable only if a specific type of RPT is proposed to be undertaken and is in addition to Part A. Seven types of RPTs have been specified.
- Part C: Applicable only if a specific type of RPT proposed to be undertaken is a Material RPT;
and is in addition to Part A and Part B (with respect to such RPT).
Treatment of transactions undertaken prior to effective date:
- The RPT Industry Standards shall be applicable from 01 September, 2025 (“effective date”). The following RPTs will not require fresh approval in accordance with RPT Industry Standard, unless there is any material modification to the terms of such RPTs;
- where approval is granted by the Audit Committee and/or shareholders before the effective date; and
- omnibus approval has been granted before Effective Date for RPTs for the financial year 2025- 2026;
- If a material RPT is approved by the Audit Committee before the effective date, the new RPT Industry Standards do not apply, irrespective of whether the notice to shareholders is sent either before, on or after the Effective Date.
- The RPT Industry Standards shall not be applicable inter alia to:
- Regulation 23(5) of SEBI LODR which deals with specific exemptions from certain prior approval requirements for RPTs under specific circumstances ; and
- Regulation 23(3)(d) of SEBI LODR which deals with omnibus approval provided by the Audit Committee once it has reviewed at least on quarterly basis the details of RPTs entered into by the listed entity.
All listed entities must present RPT proposals using the standardized format that covers essential details such as the nature and value of transactions, relationship and ownership structures, historical dealings and justifications for the transaction. The standards also require additional disclosures for specific transaction types (e.g., loans, guarantees, investments, royalties) and for material RPTs, with clear guidelines on the information to be shared at both the Audit Committee and Shareholder approval stages.
For detailed discussion, please feel free to contact devadhaantu@devadhaantu.in
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[1] SEBI Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/93 dated 26 June, 2025