Tailored to Fit Practically: Disclosure for RPTs under Revised Industry Standards

Disclosure requirements rationalised and simplified under the ISN for RPTs

Team Corplaw | corplaw@vinodkothari.com

• Revised regulatory regime on RPT disclosures before Audit Committee & Shareholders
  • Reg 23 of LODR Regulations
  • SEBI Circular dated 26th June, 2025
  • Industry Standards Note on Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions  (as revised) dated June 26, 2025 (“RPT ISN”).

• Applicability of RPT ISN
  • with effect from 1st September, 2025 (‘Effective Date’)

• Any subsequent material modification, renewal, ratification etc. after the Effective Date should require detailed disclosures as per RPT ISN

• Exemption from applicability of RPT ISN
  • Exempted RPTs: RPTs exempt from approval requirements under Reg 23(5) of LODR
  • Small value RPTs: Transactions with a related party for an aggregate value of upto Rs. 1 crore in a FY
  • RPTs placed for quarterly review under Reg. 23(3)(d).

• Minimum information to AC divided into 3 parts
  • Part A – Minimum information of the proposed RPT, applicable to all RPTs (Para A1 to A5)
  • Part B – Additional information applicable to proposed RPTs of specified nature (Para B1 to B7)
  • Part C – Additional information applicable to Material RPTs (as per Reg 23 of LODR) of specified nature (Para C1 to C6)

• Certification requirement to AC (‘KMP certificate’)
  • From
    • CEO/ Managing Director/ Whole-time Director/ Manager and
    • CFO of the listed entity
  • To the effect that
    • RPTs proposed to be entered are in the interest of the listed entity
  • Role of AC
    • To review the certificate – the fact to be disclosed in the notice to shareholders

• Minimum information to shareholders
  • Information as may be required under CA, 2013
  • Information as placed before AC in terms of RPT ISN
    • AC may approve redaction of commercial secrets and such other information that would affect competitive position of listed entity
      • Subject to affirmation that, in its assessment, the redacted disclosures still provide all the necessary information to the public shareholders for informed decision making
  • Justification as to the transaction in the interest of the listed entity
  • Basis for determination of price and other material terms and conditions of RPTs
  • Affirmation that AC has reviewed the KMP certificate on proposed RPTs
  • Disclosure of approval of AC and recommendation of board
  • Web-link and QR code of third-party reports/ valuation report, if any, considered by AC

• Role of Management
  • Management to provide information against each line-item
    • Indicate NA, where field is not applicable along with reason for non-applicability

• Comments/ decision of AC
  • AC may provide comments on any line-item, based on its discretion
  • Rationale to be disclosed, in case an RPT is not approved
  • Comments and rationale to be minutised

• Furnishing of valuation/ third party report
  • To be furnished to AC, if any
  • Web-link and QR code to be disclosed in shareholders’ notice, if considered by AC

Our analysis of the detailed disclosure requirements on relevant line-items are being collated in the form of FAQs. Keep checking our website for more.  

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