SEBI Updates RPT Materiality Thresholds and Approval Norms

Notification F. No. SEBI/LAD-NRO/GN/2025/273, Dated 18.11.2025

1. Overview

The Securities and Exchange Board of India (SEBI) has notified amendments to Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations), significantly strengthening the regulatory framework governing Related Party Transactions (RPTs).

The amendments introduce revised criteria for materiality, slab-based turnover-linked thresholds, and clarified approval mechanisms, aiming to enhance transparency and safeguard minority shareholder interests.

2. Revised Criteria for Determining Material RPTs

2.1 Shift from Monetary Limits to Turnover-Linked Thresholds

The earlier fixed monetary limits for identifying material RPTs have been replaced by thresholds prescribed in the newly inserted Schedule XII.

2.2 Schedule XII – Slab-Based Materiality Thresholds

Schedule XII introduces a graded threshold structure based on the annual consolidated turnover of the listed entity.

This ensures:

• Proportionate governance requirements,
• Better alignment between transaction size and company scale, and
• Improved relevance and consistency across entities of varying sizes.

3. Improved Framework for Subsidiary-Level Transactions

3.1 Refined Approval Requirements

SEBI has further refined approval norms applicable to RPTs undertaken through subsidiaries, including:

• Distinct materiality thresholds for subsidiaries that do not have audited financial statements, and
• Clear rules on when such transactions require audit committee approval, board approval, or shareholder approval at the listed entity level.

These changes aim to prevent indirect RPT routing through subsidiaries and strengthen oversight across the group structure.

4. Clarification on Shareholder Omnibus Approvals

Validity of Omnibus Approvals

The amendments provide clarity on:

• The validity period of shareholder omnibus approvals for material RPTs, and
• The scope of approvals granted in annual general meetings (AGMs) and other general meetings.

This ensures uniformity in compliance practice and reduces ambiguity for listed companies and investors.

5. Significance

The revised RPT framework:

• Enhances corporate transparency and governance,
• Reduces the risk of abusive RPT structures,
• Protects minority shareholder interests, and
• Brings Indian disclosure norms closer to global best practices.

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