The Securities and Exchange Board of India, on 26 June 2025, issued revised Industry Standards on the minimum information to be provided to audit committees and shareholders for approval of related party transactions, through circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/93. The revised standards were developed by the Industry Standards Forum comprising ASSOCHAM, CII, and FICCI under the aegis of stock exchanges and in consultation with SEBI.
Background
Related party transactions have been a focal point of corporate governance regulation in India, with SEBI progressively strengthening disclosure and approval requirements through amendments to the Listing Obligations and Disclosure Requirements Regulations, 2015. Regulation 23 of the LODR Regulations mandates prior approval of the audit committee for all RPTs and shareholder approval for material RPTs.
The original Industry Standards on RPT disclosures had drawn feedback from various stakeholders requesting simplification and rationalisation. SEBI accordingly directed the Industry Standards Forum to review the standards, incorporate stakeholder feedback, and issue a revised framework. The resulting June 2025 circular aims to standardise the quality and format of information presented to approval authorities while reducing unnecessary compliance burden.
Key Provisions
The revised Industry Standards establish the following:
Standardised disclosure format: A prescribed template for presenting RPT information to audit committees and shareholders, ensuring minimum comparability across listed entities. The template covers the nature of the transaction, the relationship, the arm's length justification, and the commercial rationale.
Materiality assessment framework: Clear guidance on how companies should assess the materiality of RPTs for the purpose of determining whether shareholder approval is required, aligned with the thresholds under Regulation 23(4) of LODR.
Simplified information requirements: In response to stakeholder feedback, the revised standards rationalise certain documentation requirements, particularly for routine operational transactions between related parties that recur in the ordinary course of business.
Alignment with LODR: The standards are specifically aligned with Regulations 23(2), 23(3), and 23(4) of the LODR Regulations, as well as Section III-B of the SEBI Master Circular dated 11 November 2024.
Effective date: The revised standards take effect from 1 September 2025, giving listed companies time to update their internal processes and board governance frameworks.
Implications for Practitioners
Company secretaries and compliance officers at listed companies should begin revising their RPT approval workflows to incorporate the standardised disclosure template before the September 2025 effective date. Board meeting calendar planning for the second half of FY26 should account for the new format requirements.
For practitioners advising on M&A and corporate restructuring transactions involving listed companies, the revised materiality assessment framework may affect the approval pathway for inter-group transactions. Structuring advice should account for the updated thresholds and information requirements.
The simplification of requirements for routine operational RPTs is a welcome rationalisation. However, audit committees should be cautious about treating the simplified framework as a reduction in scrutiny — SEBI's enforcement actions in recent years demonstrate that the regulator expects substantive, not merely procedural, review of related party transactions regardless of their classification as routine.