SEBI Introduces Turnover-Based Framework For Related Party Transactions

The Securities and Exchange Board of India (SEBI) has issued new norms linking the materiality of related party transactions (RPTs) to the annual consolidated turnover of listed entities.

Under the framework, transactions will be considered material at above 10% of turnover for firms up to Rs 20,000 crore, while entities between Rs 20,001 crore and Rs 40,000 crore will follow a threshold of Rs 2,000 crore plus 5% of turnover above Rs 20,000 crore. For companies above Rs 40,000 crore, the limit will be Rs 3,000 crore plus 2.5% of turnover above Rs 40,000 crore, capped at Rs 5,000 crore. The norms replace the earlier Rs 1,000 crore or 10% benchmark. SEBI has also eased disclosure requirements for RPTs valued at up to 1% of turnover or Rs 10 crore. Omnibus shareholder approvals will remain valid until the next AGM or for up to one year if granted in other general meetings.