SEBI has suggested a simplified set of disclosures to be submitted to the audit committee
The Securities and Exchange Board of India (SEBI) on Monday proposed relaxations for related-party transactions (RPTs), including disclosure norms and a turnover-based framework to determine materiality.
For entities with turnover up to ₹20,000 crore, a transaction will be considered material if it exceeds 10 per cent of the annual consolidated turnover. In the case of entities with turnover between ₹20,001 crore and ₹40,000 crore, the threshold should be ₹2,000 crore plus 5 per cent of the turnover exceeding ₹20,000 crore.
“The approach of scale-based threshold would ensure that materiality threshold increases with the increase in the turnover of the company leading to an appropriate number of related party transactions being categorised as material thereby reducing the compliance burden of listed entities,” SEBI said in a draft paper, inviting comments by August 25.
For entities with turnover exceeding ₹40,000 crore, the threshold will be ₹3,000 crore plus 2.5 per cent of the turnover exceeding ₹40,000 crore, or ₹5,000 crore, whichever is lower.
The proposed threshold was back tested with RPT data for the FYs 24 and 25 of top 100 listed entities on NSE based on turnover. Based on the analysis, “it is observed that the number of material RPTs requiring shareholders’ approval have considerably reduced by approximately 60 per cent, thereby facilitating ease for the listed entities,” SEBI said.
Upper ceiling
In order to protect the interests of minority shareholders, an absolute threshold of ₹5,000 crore as an upper ceiling has been proposed for listed entities having turnover above ₹40,000 crore.
Under the current SEBI listing obligations and disclosure requirements norms, a listed entity is required to consider an RPT as material if the transaction, either individually or taken together with previous transactions during a financial year, exceeds ₹1,000 crore or 10 per cent of the entity’s annual consolidated turnover, whichever is lower, as per its last audited financial statements.
The proposal follows representations made by stakeholders about the challenges with the existing norms, such as requiring shareholder approval for RPTs exceeding ₹1,000 crore or 10 per cent of the consolidated turnover — which is onerous for listed entities with high turnover.
SEBI has also suggested a simplified set of disclosures to be submitted to the audit committee if the total value of RPTs with a related party in a financial year .
Further, SEBI has also proposed changes related to omnibus approvals for RPTs.
Published on August 4, 2025