Revamped RPT Framework: SEBI Introduces Scale-Based Materiality Thresholds and Eases Compliance

The Securities and Exchange Board of India (SEBI) issued a consultation paper dated August 4, 2025 seeking public comments on proposed amendments to the Related Party Transactions (RPTs) framework under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) to facilitate Ease of Doing Business (Consultation Paper, which can be viewed by clicking on this link). The proposed amendments aimed to facilitate ease of doing business by reducing compliance requirements, particularly for listed entities with large turnover, by introducing a scale-based approach to materiality thresholds and other procedural relaxations.

On September 12, 2025, SEBI, in its 211th board meeting (Board Meeting, press release for which can be viewed by clicking on this link), approved the aforesaid amendments to the LODR Regulations, largely in line with the Consultation Paper, however, the proposed amendments have not been notified yet. The key changes approved by SEBI are summarised below:

1. Introduction of Scale-based Thresholds for Determining Material RPTs

SEBI has approved the introduction of the following scale-based threshold framework based on the annual consolidated turnover of the listed entity for determining material RPTs requiring shareholders’ approval:

2. Revised Threshold for Prior Approval of Audit Committee, for RPTs above INR 1 Crore by Subsidiary of Listed Entity

To remove ambiguity in cases where RPTs undertaken by a subsidiary were treated as material (requiring shareholder approval of the listed entity) but did not require prior approval from the audit committee, SEBI has revised the threshold for obtaining such audit committee approval for all RPTs above INR 1 crore undertaken by subsidiaries during a financial year to which the listed entity is not a party. The revised framework is as follows:

3. Simpler Disclosure Requirements for Smaller RPTs

To further facilitate ease of doing business, SEBI has approved a relaxation in disclosure requirements for smaller RPTs. SEBI will issue a circular specifying the minimum information that listed entities must provide to the Audit Committee and shareholders for approval of RPTs not exceeding 1% of the listed entity’s annual consolidated turnover or INR 10 crore, whichever is lower, including transactions approved by way of ratification. This will ease compliance by exempting such transactions from the detailed disclosure requirements under SEBI’s ‘RPT Industry Standards’ dated June 26, 2025.

4. Validity of Omnibus Approvals for RPTs granted by Shareholders 

To consolidate provisions relating to omnibus approvals, SEBI has approved the incorporation of the requirements regarding the validity of omnibus approvals granted by shareholders, as presently contained in paragraph (C)(11) of Section III of SEBI’s Master Circular on LODR Regulations (which can be assessed using this link), within Regulation 23(4) of the LODR Regulations.

5. Clarifications on certain provisions under the LODR Regulations

• • • Proviso (e) to Regulation 2(1)(zc): SEBI has extended the exemption under this proviso to include retail purchases by directors, key managerial personnel, or their relatives from any listed entity or its subsidiary, where such purchases are made without establishing a business relationship and at terms uniformly applicable to employees and the aforesaid persons.

• • • Regulation 23(5): SEBI has clarified that the term “holding company” in clause (b) of this regulation refers to and shall be deemed to have always referred to a “listed holding company.”