SEBI Issues New Standards for Related Party Transaction Disclosures
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The Securities and Exchange Board of India (SEBI) issued a circular introducing new standards for disclosures related to Related Party Transactions (RPTs) by listed companies. These standards will come into effect from September 1, 2025. IPO Valuation Mastery: Pitch, Price & Prevail! Register Now The decision aims to standardize the minimum information that listed...
The Securities and Exchange Board of India (SEBI) issued a circular introducing new standards for disclosures related to Related Party Transactions (RPTs) by listed companies. These standards will come into effect from September 1, 2025.
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The decision aims to standardize the minimum information that listed entities must provide to their Audit Committees and shareholders while seeking approval for RPTs, ensuring better consistency and clarity in compliance with the Listing Obligations andDisclosure Requirements (LODR) Regulations.
What are Related Party Transactions?
Related Party Transactions are deals or arrangements made between a company and its related parties, which may include its directors, key managerial personnel, or entities where these individuals have significant influence. Due to potential conflicts of interest, such transactions require strict scrutiny and transparent disclosures to protect shareholder interests.
According to the circular issued on June 26, 2025, SEBI, in consultation with industry bodies including ASSOCHAM, FICCI, and CII, has finalized Industry Standards that define what minimum information should be provided while seeking RPT approvals.
The revised framework will ensure:
- A standard format for presenting information on RPTs to Audit Committees for review and approval.
- Inclusion of this standardized information in explanatory statements sent to shareholders seeking their approval for RPTs, in addition to requirements under the Companies Act, 2013.
- Replacement of earlier circulars issued in February and March 2025, streamlining compliance procedures for listed entities.
Industry Participation and Implementation
The Industry Standards Forum (ISF), consisting of ASSOCHAM, FICCI, and CII representatives under SEBI's guidance, drafted these standards after incorporating stakeholder feedback to simplify and clarify the disclosure process.
Industry associations and stock exchanges will now:
- Publish the finalized RPT Industry Standards on their websites for wider access.
- Prepare FAQs in consultation with SEBI to address common queries from stakeholders for smoother compliance.
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