The Securities and Exchange Board of India (SEBI) has introduced a new Industry Standard on “Minimum Information to be Provided for Review by the Audit Committee and Shareholders for Approval of Related Party Transactions (RPTs).”
This standard, effective from April 1, 2025, applies to all listed entities in India and aims to standardize reporting and disclosure requirements, thereby elevating governance, transparency, and oversight of related party transactions (RPTs).
The key requirements include ensuring accurate identification of all related parties as per Regulation 2(1)(zb) of SEBI’s LODR Regulations, 2015. Transactions must be classified based on materiality, distinguishing between material RPTs, transactions involving promoters or promoter groups exceeding prescribed thresholds, and residual RPTs outside the above categories.
Internal auditors must verify that adequate documentation is maintained for each related party transaction (RPT), capturing all relevant details as applicable. This includes basic details of the related party, relationship and ownership of the related party, financial performance of the related party, details of previous transactions with the related party, amount of the proposed transactions, and basic details of the proposed transaction. Additional details must also be maintained for proposed transactions relating to the sale, purchase, or supply of goods or services, or any other similar business transaction; loans, inter-corporate deposits, or advances given by the listed entity or its subsidiary; investments made by the listed entity or its subsidiary; and guarantee (excluding performance guarantee), surety, indemnity, or comfort letter made or given by the listed entity or its subsidiary.
