SEBI relaxes Minimum Information to be Provided for Approval of Related Party Transactions (RPTs)
Summary: SEBI, through a Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/135 dated October 13, 2025, introduced threshold-based relaxations to the mandatory Industry Standards Forum (ISF) disclosure format for Related Party Transactions (RPTs) to simplify compliance for listed entities. Effective immediately, the circular provides that RPTs with a value (individually or cumulatively) not exceeding ₹1 crore are fully exempt from the detailed enhanced disclosure requirements for both the Audit Committee and shareholders. For RPTs exceeding ₹1 crore but remaining below the higher threshold of 1% of annual consolidated turnover or ₹10 crore (whichever is lower), only a limited set of information, specified in Annexure-13A, must be provided. Transactions surpassing this higher threshold continue to require full disclosure as per the ISF Standards. This move maintains regulatory oversight for material RPTs while significantly reducing the compliance burden and paperwork for small, routine, or frequent transactions, allowing companies to streamline their internal RPT approval processes.
Background:
Earlier, through the Master Circular dated November 11, 2024, and Circular dated June 26, 2025 issued by SEBI, SEBI had mandated all listed entities to comply with the Industry Standards Forum (ISF) format effective from September 1, 2025 — “Minimum information to be provided to the Audit Committee and Shareholders for approval of RPTs.”
This was aimed at bringing uniformity and greater disclosure transparency in RPT approvals.
However, after feedback from the Industry Standards Forum (ISF) and public consultation, SEBI has now provided relaxations to facilitate ease of doing business for listed companies, especially for smaller or routine RPTs.
Key Changes Introduced:
(A) Threshold-based Relaxation
- If the RPT value (individually or cumulatively during a financial year) does not exceed 1% of the annual consolidated turnover of the listed entity or ₹10 crore (whichever is lower) → only limited information as per Annexure-13A needs to be provided.
- If the RPT value (individually or cumulatively) does not exceed ₹1 crore, → no requirement to provide even the Annexure-13A information. (i.e., complete exemption from these enhanced disclosure requirements).
(B) For Audit Committee (Part A – Section III-B of Master Circular)
- The Audit Committee must be provided with information as per the ISF Standards.
- However, where transactions are below the above threshold, only Annexure-13A disclosures are required.
(C) For Shareholders (Part B – Section III-B of Master Circular)
- Notice to shareholders (explanatory statement) must include information as per ISF Standards.
- But again, where transactions are within the lower threshold limits, only Annexure-13A disclosures suffice.
Effective Date:
- The Circular is effective immediately (i.e., from October 13, 2025).
Clarification:
- The ₹1 crore exemption threshold mentioned in Para 3(c) of RPT Industry Standards continues to apply.
Thus, transactions up to ₹1 crore remain fully exempt from these detailed disclosure norms.
Practical Impact:
1. Ease of Compliance
Smaller or routine RPTs (below ₹10 crore or 1% of turnover) will now attract a simplified disclosure format — reducing paperwork and compliance load.
2. Reduced Burden for Frequent Transactions
Companies that frequently enter RPTs (like management service fees, intra-group reimbursements, etc.) can now avoid detailed ISF-format disclosures for small-value items.
3. Greater Flexibility
Helps mid-sized companies where the 1% turnover figure is still material — providing flexibility to avoid lengthy reporting unless the RPT is significantly large.
Format for Disclosures (Annexure-13A)
For Audit Committee Approval:
- Type, material terms, particulars, value, and tenure of the transaction
- Name and relation of the related party or its subsidiary
- % of listed entity’s annual consolidated turnover represented by transaction (if involving subsidiary,
such percentage calculated on the basis of the subsidiary’s annual turnover on a standalone basis shall be additionally provided)
- Justification for entering into RPT
- For loans/advances/investments, disclose terms, interest, repayment schedule, security, purpose, and (if applicable) source of funds, nature of indebtedness, cost of funds, and tenure (source of funds, nature of indebtedness, cost of funds, and tenure exempt for listed banks/NBFCs/insurance/Housing Finance Companies).
- Valuation or other external party report, if any
- Percentage of the counter-party’s annual consolidated turnover that is represented by the value of the proposed RPT on a voluntary basis
- Any other relevant information
For Shareholders’ Approval (Along with explanatory statement):
- Summary of info provided to Audit Committee
- Justification and valuation details
- Where the transaction relates to any loans, inter-corporate deposits, advances or investments made or given by the listed entity or its subsidiary, the information placed before the audit committee;
- % of counterparty annual consolidated turnover represented by the transaction, on a voluntary basis
- Declaration that valuation report (if any) will be made available
- Any other relevant details
Conclusion:
SEBI has struck a balance between transparency and practicality. The relaxation acknowledges that not all RPTs are material or sensitive, and over-disclosure can burden both companies and investors.
For compliance teams, this means:
- Revisiting internal RPT approval templates
- Updating Audit Committee and shareholder notice formats as per Annexure-13A
- Implementing internal checks for transaction value thresholds (₹1 crore, 1% turnover, ₹10 crore)
Should you have any questions or require further assistance, please feel free to reach out to us.
Practical FAQs: SEBI RPT Relaxation Circular (Oct 13, 2025)
Q1. Which transactions are eligible for the relaxed disclosure norms?
Transactions whose value does not exceed 1% of annual consolidated turnover or ₹10 crore (whichever is lower). Transactions ≤ ₹1 crore are fully exempt from detailed disclosure.
Q2. Do I need to provide Annexure-13A information for all RPTs?
No. Only RPTs above ₹1 crore and within 1% of annual consolidated turnover or ₹10 crore (whichever is lower) need Annexure-13A disclosures. RPTs ≤ ₹1 crore require no enhanced disclosure. Transactions exceeding 1% of turnover or ₹10 crore must provide full ISF-format disclosures to the Audit Committee and shareholders.
Q3. Are banks, NBFCs, insurance companies, and HFCs required to disclose source of funds and debt details for loans/advances/investments?
No. These entities are exempt from disclosing source of funds, nature of indebtedness, cost of funds, and tenure. They still need to disclose terms, interest, repayment, security, and purpose.
Q4. Do the relaxations apply to both Audit Committee and Shareholder approvals?
Yes. For Audit Committee, Annexure-13A applies to smaller transactions; for Shareholders, the explanatory statement can also be simplified for transactions within threshold.
Q5. If a transaction exceeds the threshold mid-year cumulatively, what happens?
Cumulative value of all related party transactions with the same party during the financial year is considered. If cumulative exceeds the threshold, full disclosures as per ISF are required.
Q6. Does this mean we can skip documentation for small RPTs?
No. Even exempt transactions should be documented internally for records and audit purposes; relaxations only reduce the level of disclosure to Audit Committee or shareholders.
Q7. How does this affect internal RPT approval templates?
Templates must be updated to include threshold checks, Annexure-13A fields, and exemption notes for banks/NBFCs/insurance/HFCs, ensuring correct disclosure based on transaction value.
Q8. Can we voluntarily provide more information than required?
Yes. SEBI allows voluntary disclosure of counterparty turnover or other relevant info, which can improve transparency and governance.
Q9. Effective date and applicability?
The circular is effective immediately from October 13, 2025, and applies to all RPTs approved thereafter.
Q10. What’s the practical benefit of these relaxations?
Reduces compliance burden for small or routine transactions, avoids over-disclosure, saves time for Audit Committee reviews, and enables faster approvals for routine RPTs.
Q.11. When are the RPT Industry Standards not applicable?
The RPT Industry Standards shall not apply to:
a) Transactions exempt under Regulation 23(5) of SEBI (LODR) Regulations;
b) Quarterly review of RPTs by the Audit Committee under Regulation 23(3)(d); and
c) Transaction(s) with a related party that, individually or cumulatively during a financial year (including by ratification), do not exceed ₹1 crore.
Disclaimer: The content provided in this article is based on research and is for informational and academic purpose only and should not be constituted as legal advice or advertisement/ solicitation. While every effort has been made to ensure accuracy, discrepancies may still occur. Readers are therefore advised to cross-verify the information with the original source.
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