Mumbai, August 4, 2025: The Securities and Exchange Board of India (SEBI) issued a landmark consultation paper proposing the most significant reform of Related Party Transaction (RPT) regulations under the Listing Obligations and Disclosure Requirements (LODR) in a decade. The overhaul abandons the existing uniform threshold—₹1,000 crore or 10% of consolidated turnover—for shareholder approval, replacing it with scale-based thresholds calibrated to company size.
Under the proposal:
- Turnover up to ₹20,000 crore: 10% of annual consolidated turnover
- Turnover ₹20,001–40,000 crore: ₹2,000 crore + 5% of turnover above ₹20,000 crore
- Turnover above ₹40,000 crore: ₹3,000 crore + 2.5% of turnover above ₹40,000 crore, capped at ₹5,000 crore
SEBI’s analysis indicates this will slash the number of RPTs requiring shareholder votes by approximately 60% for large corporates, alleviating compliance burdens while preserving minority protections via the ₹5,000 crore ceiling. Enhanced subsidiary governance rules propose audit-committee oversight only when subsidiary-level RPTs cross the lower of 10% of subsidiary turnover or the parent’s threshold.
The overhaul also introduces:
- Streamlined omnibus approval provisions to formalize validity periods
- Relaxed disclosure norms, shifting from extensive “Industry Standards Forum” templates to proportionate information requirements based on transaction value.|
Developed by SEBI’s Advisory Committee on LODR, comments were invited through August 25, 2025. The SEBI board endorsed the reforms in principle on September 12, 2025, and the revised RPT Industry Standards took effect on September 1, 2025, superseding prior circulars. Market observers hail the initiative as a balanced approach, fostering ease of business for large entities without compromising governance and minority shareholder rights.