SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2025
The Securities and Exchange Board of India (SEBI), through its Listing Obligations and Disclosure Requirements (Fifth Amendment) Regulations, 2025, has introduced a transformative shift in how material Related Party Transactions (RPTs) are determined and approved. Published on 19th November 2025, this amendment marks a significant recalibration in corporate governance norms, particularly at the intersection of transparency, shareholder protection, and ease of doing business.
At the core of the regulatory change lies SEBI’s decision to overhaul the materiality threshold for RPTs by introducing a turnover-based, multi-tiered scale, now codified under Schedule XII. This change arrives after years of industry demand for a more rational, risk-aligned threshold mechanism that accounts for the differing size and operating scales of listed entities. The issue gained prominence as regulators and corporate bodies debated whether the earlier “one-size-fits-all” 10% threshold truly reflected materiality in substance.
The amendment introduces a new approach that recognizes the diversity of India’s corporate landscape. By linking materiality thresholds to a company’s annual consolidated turnover, SEBI attempts to strike a balance between robust oversight of large-value transactions and reducing unnecessary compliance burden for high-turnover enterprises. At the same time, the Board has tightened subsidiary-level oversight by mandating Audit Committee approval for all related-party transactions above ₹1 crore, subject to comparison with subsidiary turnover metrics or the newly introduced thresholds.
This regulatory shift is not merely procedural—it reflects a larger policy direction. SEBI aims to strengthen RPT governance while preventing shareholders from being overwhelmed with approvals on routine, non-material transactions. The calibrated thresholds underscore SEBI’s recognition of the importance of proportionality in governance, especially for conglomerates and entities with large consolidated revenues.
The materiality thresholds under the new Schedule XII are as follows:
| Consolidated Turnover of Listed Entity | Threshold |
| (I) Up to ₹20,000 Crore | 10% of the annual consolidated turnover of the listed entity |
| (II) More than ₹20,000 Crore to upto ₹40,000 Crore | ₹2,000 Crore + 5% of the annual consolidated turnover of the listed entity above ₹20,000 Crore |
| (III) More than ₹40,000 Crore | ₹3,000 Crore + 2.5% of the annual consolidated turnover of the listed entity above ₹40,000 Crore or ₹5000 Crores, whichever is lower |
Explanation: For the purpose of computing the thresholds stated above, the annual consolidated turnover of the listed entity shall be determined based on the last audited financial statements of the listed entity.
| Illustration 1. For listed entities in (II) |
| If the annual consolidated turnover of a listed entity is ₹30,000 Crore | ₹2,000 Crore + 5% of the remaining ₹10,000 Crore = ₹2,500 Crore |
| Illustration 2. For listed entities in (III) |
| If the annual consolidated turnover of a listed entity is ₹50,000 Crore | ₹3,000 Crore + 2.5% of the remaining ₹10,000 Crore = ₹3,250 Crore |
Illustration 3. For listed entities in (III) |
| If the annual consolidated turnover of a listed entity is ₹1,50,000 Crore
| ₹3,000 Crore + 2.5% of the remaining ₹1,10,000 Crore = ₹5,750 Crore. However, threshold for material related party transaction would be ₹5,000 Crore as it is lower than ₹5,750 Crore. |