RPT Industry Standards: New Proposal Seeks to Ease Compliance

The Securities and Exchange Board of India (SEBI) has proposed certain relaxations regarding the minimum information to be provided to the audit committee and shareholders for approval of related party transactions (RPTs). This proposal is part of its consultation paper dated August 4, 2025.

The relaxation pertains to the applicability of the RPT Industry Standards, which were issued in June 2025 and are scheduled to take effect from September 1, 2025. These standards, inter alia, provide for an exemption threshold of ₹1 crore. A review was considered necessary as this limit appeared too low for listed entities with high turnover. Accordingly, SEBI has proposed enhancing the threshold to facilitate ease of doing business for listed entities.

While the existing ₹1 crore threshold will remain in place, a new category of RPTs is proposed, for which the listed entity would only be required to provide the reduced set of information specified in the draft circular annexed to the consultation paper. This information requirement would be less extensive than the minimum information currently prescribed under the RPT Industry Standards.

It is proposed that, if RPTs with a related party, whether individually or taken together with previous transactions during a financial year (including transactions approved by way of ratification), do not exceed:

• 1% of the annual consolidated turnover of the listed entity as per the last audited financial statements, or
• ₹10 crore,

whichever is lower, the listed entity would provide only the information specified in the draft circular.

Example

If a listed entity’s annual consolidated turnover is ₹1,200 crore, 1% would be ₹12 crore. The threshold would therefore be ₹10 crore, as it is the lower amount. If the amount of the RPT is up to ₹1 crore, neither the RPT industry standards nor the information specified in the proposed draft circular will apply. If the amount exceeds ₹1 crore but is below ₹10 crore, the information specified in the proposed draft circular should be provided. If the amount exceeds ₹10 crore, the RPT Industry Standards must be followed.

Conclusion

The proposed changes are expected to ease compliance for RPTs that are above ₹1 crore but still small. SEBI has also suggested key changes to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including those concerning thresholds for determining material RPTs and the validity of omnibus approval for RPTs granted by shareholders.