The Securities and Exchange Board of India, through Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/37 dated 21 March 2025, extended the implementation deadline for industry standards on minimum information to be provided for review and approval of related party transactions. The new effective date was pushed from 1 April 2025 to 1 July 2025, giving listed entities additional time to align their internal processes.
Background
Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that all related party transactions require prior approval of the Audit Committee, and material RPTs additionally require shareholder approval. SEBI's Master Circular dated 11 November 2024 had outlined the information framework that must be placed before the Audit Committee and shareholders when seeking such approvals.
In February 2025, SEBI had formalised industry standards specifying the minimum information that must accompany every RPT proposal submitted for audit committee and shareholder review. These standards were originally set to take effect from 1 April 2025. However, representations from listed entities and industry bodies indicated that the compressed timeline created compliance difficulties, particularly for companies with complex group structures and high volumes of recurring RPTs.
Key Provisions
The circular of 21 March 2025 provides:
Extended deadline: The industry standards on minimum information for RPT approval are now effective from 1 July 2025, providing a three-month extension from the original 1 April 2025 date.
Scope unchanged: The substantive requirements of the standards remain unaltered. Listed entities must provide detailed information on the nature, value, terms, and commercial rationale of each RPT when seeking audit committee and shareholder approval.
Applicability: The standards apply to all listed entities subject to Regulation 23 of the LODR Regulations, covering both material and non-material related party transactions that require audit committee approval.
Transition guidance: Entities are expected to use the additional three months to implement systems, templates, and approval workflows that comply with the prescribed minimum information requirements.
Implications for Practitioners
Corporate governance practitioners and company secretaries should use the extended deadline strategically rather than treating it as a deferral. The requirements themselves are not simplified — only the timeline has shifted. Companies with complex RPT portfolios should begin mapping their recurring transactions against the prescribed information templates immediately.
Audit committee members should expect significantly more detailed RPT proposals from 1 July 2025 onwards. Practitioners advising listed entities should conduct training sessions for audit committee members on the new disclosure format and the type of questions that the enhanced information is intended to address.
The extension also provides an opportunity for companies to review their existing RPT policies and internal approval matrices. Entities that have historically relied on summary-level disclosures for audit committee approvals will need to overhaul their presentation materials to meet the granular information requirements prescribed by the industry standards.