SEBI Clarifies Minimum Information to be provided to Audit Committee and Shareholders for Approval of Related Party Transactions [Read Circular]

The Securities and Exchange Board of India (SEBI) has issued a new circular dated June 26, 2025 setting out the minimum information which listed entities must provide to their Audit Committees and shareholders when seeking approval for related party transactions.

This guidelines have been given in line with Regulation 23(2), (3), and (4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, commonly known as LODR Regulations which have to be mandatorily followed for companies to get the approval of the Audit Committee. In the case of material transactions, the approval of shareholders before entering into related party transactions is also necessary.

Earlier, the required information was specified in Part A and Part B of Section III-B of the SEBI Master Circular dated November 11, 2024. To bring more clarity and consistency to the process, the Industry Standards Forum (ISF) was constituted, comprising representatives from major industry associations such as ASSOCHAM, CII, and FICCI, under the aegis of the stock exchanges and in consultation with SEBI.

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The main objective of the Industry Standards is to provide a standard format so that all listed companies present the same minimum information, ensuring transparency and comparability whenever Audit Committees and shareholders are asked to review and approve RPTs.

The process began with SEBI’s circular dated February 14, 2025, which made it mandatory for listed entities to follow these industry standards from April 1, 2025. However, after considering feedback from various stakeholders, SEBI extended the deadline for compliance to July 1, 2025, and requested the ISF to simplify the standards where possible.

After further consultation, revised standards have now been finalized and are to be followed from September 1, 2025. These standards specify exactly what information must be given to the Audit Committee and what must be sent to shareholders in the explanatory statement while seeking their approval, as per all the requirements under the Companies Act, 2013.

SEBI has also directed industry associations and stock exchanges to publish these standards and related FAQs on their websites to help companies comply.

All stock exchanges have been directed to inform their listed companies and ensure compliance. For the full details, the circular can be accessed at: https://www.sebi.gov.in/legal/circulars/jun-2025/industry-standards-on-minimum-information-to-be-provided-for-review-of-the-audit-committee-and-shareholders-for-approval-of-a-related-party-transaction_93999.html.

The circular has been undersigned by Raj Kumar Das, Deputy General Manager of the Corporation Finance Department at SEBI.

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