October 14, 2025

Hold on, listed companies! SEBI just raised the bar on how you handle related party transactions (RPTs). On Monday, the market watchdog announced fresh, tight guidelines to make these transactions crystal clear to your audit committees and shareholders. Now, before any nod, companies must explain why the transaction benefits them. No magic here — you also need to share any valuation or external reports you used. Plus, you get to (voluntarily) reveal what slice of the counterparty’s annual turnover the deal covers! That’s right, full transparency is the name of the game. But wait, there’s more! When seeking your shareholders’ thumbs up, the explanatory statement must recap all info shared with the audit committee. It should also dish out details of any loans, advances, or investments involved. Oh, and any valuation or external reports? Shareholders will get access to them via their registered email — neat and easy! These juicy details have to be out in the open whenever a related party deal is proposed for approval. The best part? This circular kicks in immediately, no waiting! Don’t fret if your RPTs are tiny – SEBI has a cool break for smaller transactions. If your related party deals are below 1% of your company’s annual consolidated turnover or under Rs 10 crore — whichever is less — you’re off the hook from these detailed disclosure rules. So, little deals get the luxury of less paperwork. This spicy move by SEBI follows the board’s September nod to relax info demands for RPT approvals. It’s a win for companies that want smoother approvals but also means more eyes on the big or tricky deals. So, watch this space, companies and shareholders! SEBI's fresh guidelines pack a punch in transparency, ensuring every related party transaction is out in the open with all facts on the table. How’s that for making markets cleaner and smarter?

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Tags: Sebi, Related party transactions, Listed companies, Audit committee, Shareholder approval, Disclosure norms,