Mumbai, Sep 12 (PTI) Market regulator Sebi on Friday decided to introduce a threshold-based framework to determine the materiality of related party transactions (RPTs), based on the annual consolidated turnover of the listed entity. The Sebi board also approved a proposal to revise thresholds for approval by audit committees for RPTs undertaken by subsidiaries and simplified disclosure requirements for smaller RPTs. These frameworks are aimed at addressing practical challenges, removing ambiguities, and striking a balance between investor protection and ease of doing business under the Listing Obligations and Disclosure Requirements (LODR) norms, Sebi said in a statement after the conclusion of its board meeting. Under the approved framework, transactions will be considered material if they exceed 10 per cent of turnover for entities up to ₹20,000 crore, ₹2,000 crore plus 5 per cent of turnover above ₹20,000 crore for firms up to ₹40,000 crore, and ₹3,000 crore plus 2.5 per cent of turnover above ₹40,000 crore (capped at ₹5,000 crore). An absolute ceiling of ₹5,000 crore has been set to protect minority shareholders. Under the current LODR (Listing Obligations and Disclosure Requirements) norms, a listed entity is required to consider an RPT as material if the transaction, either individually or taken together with previous transactions during a financial year, exceeds ₹1,000 crore or 10 per cent of the entity’s annual consolidated turnover, whichever is lower, as per its last audited financial statements. Makarand Joshi, founder partner, MMJC and Associates, a corporate compliance firm, said that the introduction of enhanced materiality thresholds, the number of RPT resolutions requiring member approval, will be reduced significantly, aligning regulatory focus on transactions of real substance. “This is a welcome relief for fast-growing groups and brings particular ease for subsidiaries without lengthy operational records, who now benefit from clearer compliance processes,” he said. Also, the Sebi board approved several changes to ease regulations for Investment Advisors (IAs) and Research Analysts (RAs), as well as a complete revamp of the framework for Registrars to an Issue and Share Transfer Agents (RTAs). IAs and RAs will now be allowed to share past performance data with clients in a certified format for two years, give second opinions on already distributed assets by charging up to 2.5 per cent annually with client consent, and have extended timelines to corporatise after crossing the ₹3 crore threshold while continuing to add clients and earn fees during the transition. Eligibility norms have been relaxed to allow graduates from any stream to register as IAs/RAs after completing the required NISM certifications. The registration process has been simplified by removing the need to submit proof of address, CIBIL reports, net worth statements, or infrastructure details, though basic disclosures and id in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. 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Sebi plans to implement a framework based on thresholds to assess the significance of related party transactions.
