Market Watchdog Sebi Sets New RPT Guidelines
Market regulator Sebi issued new guidelines requiring listed companies to provide detailed information to audit committees and shareholders for related party transaction approval. The guidelines aim to ensure clarity and transparency in transactions, especially those of significant value. Smaller transactions are exempt from extensive disclosure requirements.
- Country:
- India
Market regulator Sebi has unveiled fresh guidelines aimed at bolstering transparency and clarity in related party transactions (RPT) undertaken by listed companies. The guidelines mandate a comprehensive exchange of information with both audit committees and shareholders before approving any transaction.
According to Sebi's latest circular, companies must explain the rationale behind each transaction, provide any pertinent valuation or external reports, and voluntarily disclose the percentage of the counterparty's annual turnover represented by the transaction. Furthermore, during shareholder approval processes, companies are expected to convey these details transparently, ensuring all stakeholders are well-informed.
Effective immediately, the circular also introduces relaxed norms for smaller RPTs, waiving detailed requirements for those not exceeding 1% of annual consolidated turnover or Rs 10 crore. This follows Sebi's board approval of proposed relaxations last month to streamline the information dissemination process.
(With inputs from agencies.)
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