Sebi revises related party transaction rules

ET BureauLast Updated: Jun 28, 2025, 08:08:00 AM IST

Synopsis

The Securities and Exchange Board of India has updated regulations concerning related party transactions. Company management must now secure certification from key executives for audit committees. Shareholders will receive valuation reports for significant transactions. Requirements for royalty payment disclosures are relaxed. These revised rules, developed with industry input, will be effective from September 1, 2025.

Mumbai: The Securities and Exchange Board of India (Sebi) has revised rules on related party transactions (RPT). Under the proposed changes, the management of a company will have to provide a certificate from the chief executive officer or whole-time director and chief financial officer to the audit committee confirming that the terms of RPTs proposed to be entered into are in the interest of the listed company. Earlier promoters were also required to give the certificate but now it has been done away with.

Further, under the minimum information to be provided to the shareholders for approval of material RPTs, the company management will have to provide a copy of the valuation report from external party.

The regulator said, companies would have to provide web link and QR code, through which shareholders can access the valuation report or other reports of external party considered by audit committee while approving the RPT.

Sebi has also eased the requirement for peer comparison in royalty payment-related disclosures. The new rule would become effective from September 1, 2025. The proposed changes have been made in consultation with industry standards forum after concerns were raised on over-regulation and compliance burden.

...moreless

...moreless