SEBI Circular – Minimum  information  to  be  provided  to  the  Audit  Committee  and Shareholders for approval of Related Party Transactions in Disclosure Norms

Introduction

On October 13, 2025, SEBI issued Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/135, introducing modifications to the regulatory regime related to the disclosure and approval mechanism concerning Related Party Transactions (“RTP”). The circular has been issued to all listed entities, recognized stock exchanges, and other leading industry associations, including ASSOCHAM, FICCI, and CII, in order to facilitate ease of compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In this regard, it amends the “Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions,” under Section III-B of the SEBI Master Circular dated November 11, 2024, and the SEBI Circular dated June 26, 2025. These changes are based on a representation received from ISF for relaxation of the extensive disclosure requirements under the RPT Industry Standards.

Law

Accordingly, vide circular dated June 26, 2025, SEBI directed that all listed entities shall comply with the RPT Industry Standards formulated by the Industry Standards Forum (“ISF”). The said standards, inter alia, prescribed an exhaustive set of disclosures for all transactions with related parties, irrespective of materiality to achieve greater comparability and uniformity across entities. Subsequently, upon representations received from the industry, it was represented that such requirements placed an undue compliance burden on small transactions and resulted in duplication of disclosures already envisaged under the Companies Act, 2013.

Thus, the revised circular updates Paragraph 4 of Part A and Paragraph 6 of Part B under Section III-B of the Master Circular so as to bring the disclosures in line with the principles of proportionality and materiality. These amendments are issued in exercise of the powers conferred by Sections 11(1) and 11A of the SEBI Act, 1992, read with Regulation 101 of the LODR Regulations. The circular calls upon all listed entities to implement the revised provisions with immediate effect and instructs the stock exchanges to circulate its contents for compliance by the listed entities.

Amendments

The major changes brought in by the SEBI circular relate to the extent and nature of information that need to be presented before the Audit Committee and the shareholders while seeking approval for related-party transactions.

1. Amendment to Part A of Section III-B-Information to the Audit Committee Para 4 of Part A of Section III-B of the Master Circular has been substituted.

The amended provision makes it obligatory for the listed entity to provide information to the Audit Committee in terms of Industry Standards on “Minimum Information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions.”

However, now SEBI has introduced a graded disclosure framework based upon transaction value. If the transaction with the related party, individually or taken together with the previous transactions in the same financial year including transactions approved earlier by ratification, does not exceed 1% of the annual consolidated turnover of the listed entity or ₹10 crores whichever is lower, Minimum information to be given as per Annexure-13A of the circular.

• Further Exemption: The transactions that are singly/transacted or cumulatively transact (including ratified transactions) and do not exceed ₹ 1 crore are wholly exempted from these disclosure requirements.
• This amendment reduces the level of disclosure specifically required for low-value transactions, simplifies compliance for listed entities, and retains a detailed format for material transactions.

2. Amendment to Part B of Section III-B – Information to Shareholders

Paragraph 6 under Part B of Section III-B has also been replaced with the revised shareholder disclosure in accordance with the revised framework. The notice for approval from the shareholders in respect of a transaction requiring shareholders’ approval under RPT shall contain information as specified under the Companies Act, 2013 and RPT Industry Standards; provided further that in respect of small-value transactions, SEBI has now provided a threshold of relaxation corresponding to:

• The notice shall contain minimum information as prescribed in Annexure-13A where the transaction value is individually or in combination, along with the transactions ratified, does not exceed 1% of consolidated annual turnover or ₹10 crore, whichever is lower.
• Transactions less than ₹1 crore are not required at all, similar to Audit Committee disclosures.

3. Continuation of Existing Exemption

SEBI explained that the threshold for exemption of ₹1 crore as contained in Para 3(c) of the RPT Industry Standards would remain applicable, reiterating the basic principle that very small transactions need not be subjected to extensive procedural scrutiny.

4. Annexure-13A – Prescribed Minimum Information Format

The circular introduces Annexure-13A, which prescribes the minimum information required to be disclosed to the Audit Committee and shareholders for approval of related-party transactions.

(A) For Audit Committee Approval: The listed entity must give the information stated in the form and content below:

• The type, nature, and terms of the transaction.

• The name of the related party and the relationship with the entity or its subsidiary.

• Tenure and value of the proposed transaction.

• The proportion of the business’s annual consolidated turnover accounted for by the transaction.

• In the case of loans, inter-corporate deposits, advances, or investments: source of funds, nature and cost of indebtedness, tenure, covenants, and utilization by the ultimate beneficiary.

(B) Shareholder approval:

The explanatory statement attached to the notice sent to shareholders shall contain the following:

Overview Summary of information provided to the Audit Committee

• Justification of the benefit of the transaction to the listed entity.
• Details of loans, deposits, or investments, if any.
• A statement that any valuation or external report relied upon shall be available to shareholders through registered email addresses.
• The percentage of the counterparty’s turnover constituted by the RPT and any other related information.

These prescribed formats ensure uniformity in disclosure, with the flexibility for smaller or immaterial transactions.

5. Effective Date and Compliance

The circular is effective immediately. Listed entities shall comply with the new format and, wherever applicable, the RPT Industry Standards in accordance with the provisions of Regulation 23(2), 23(3), and 23(4) of the LODR Regulations. It is, therefore, directed that the stock exchanges shall inform the listed entities about the changes so as to enable smooth implementation.

Conclusion

The SEBI Circular dated October 13, 2025, was an important recalibration of the related party transaction disclosure framework. SEBI has attempted to strike a balance between regulatory oversight and practical business considerations by revising the Master Circular and relenting on certain disclosure requirements. This is further evident by the introduction of threshold-based exemptions-₹10 crore or 1% of annual consolidated turnover, whichever is lower-and a complete exemption for transactions below ₹1 crore, which are indicative of pragmatic changes toward corporate governance compliance.

The newly incorporated Annexure-13A standardizes the format for disclosures to be made to Audit Committees and shareholders in a manner that represents all the basic information concisely yet comprehensively. The changes are thus far expected to reduce the administrative burden, foster consistency, and uphold the integrity of related party oversight mechanisms. This circular showcases SEBI’s firm commitment to achieve the highest level of corporate governance and efficiency with transparency in the structure of the Indian capital market.