SEBI Relaxes RPT Disclosure Rules: Thresholds and Exemptions

Minimum Information To Be Provided To The Audit Committee And Shareholders For Approval of Related Party Transactions

Summary: SEBI  Circular No.: SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/135 rationalizes the compliance burden for Related Party Transaction (RPT) disclosures, modifying the industry standards previously mandated for listed entities. The goal is to improve transparency and comparability while offering relief from excessive reporting. The circular introduces a three-tiered, threshold-based approach for disclosures to the Audit Committee and shareholders. RPTs valued at up to Rs.1 crore in a financial year are fully exempted from providing even minimum information. For RPTs that do not exceed the lower of 1% of annual consolidated turnover or Rs.10 crore, only a basic level of disclosure (as per Annexure-13A) is required. However, RPTs exceeding that lower threshold must adhere to the full disclosure requirements set by the RPT Industry Standards, ensuring that material transactions receive comprehensive scrutiny.

REGULATORY CONTEXT:

• SEBI had previously mandated that all listed entities adhere to “Industry Standards on RPT Disclosures” for consistency and transparency. These were introduced via the circular dated June 26, 2023, and enforced through the Master Circular of November 11, 2024.
• These Industry Standards were developed by the Industry Standards Forum (ISF) — a collaborative body formed by industry associations (like CII, FICCI, and ASSOCHAM) to * provide consistent guidelines for RPTs.
• The primary objective was to improve transparency and comparability in how companies disclose RPTs to the Audit Committee and shareholders.
• However, based on representations from the Industry Standards Forum (ISF) and SEBI’s Advisory Committee on Listing Obligations and Disclosure Requirements (LODR), there was a need to rationalize the compliance burden.

KEY PROVISIONS OF THE CIRCULAR

1. Threshold-Based Relaxation for RPT Disclosures

SEBI introduces three thresholds to determine the level of disclosure required:

1.1 Exemption from Minimum Disclosures

• RPTs ≤ ₹1 crore (individually or taken together with previous transactions during a financial year including one which are approved by way of ratification):

→ No need to provide even minimum information to Audit Committee or shareholders.

→ Fully exempted from disclosure.

1.2 Relaxed Disclosure Requirements (Minimum Information Format)

• RPTs that individually or cumulatively (including ratified transactions) in a financial year Do not exceed
• 1% of annual consolidated turnover or
• ₹10 crore, (whichever is lower)

→ Only minimum information needs to be shared with:

• The Audit Committee
• Shareholders, if shareholder approval is required.

→ Format and content of this “minimum information” will be specified in Annexure 13A.

1.3 Full Disclosure Requirements (As specified by the Expert Committee)

• RPTs that individually or cumulatively (including ratified transactions) in a financial year Exceeds
• 1% of annual consolidated turnover or
• ₹10 crore, (whichever is lower)

Full information needs to be shared with:

• The Audit Committee
• Shareholders, if shareholder approval is required.

As specified under the industry standards on RPT.

THE FOLLOWING TABLE PROVIDES A CLEARER UNDERSTANDING OF THE CONCEPT.