Archive · 19 Sep 2025
Sebi Introduces Scale-Based Approach for Related Party Transactions
Sebi, India's market regulator, has changed how it looks at deals between a company and related parties.
Instead of a fixed limit, the rules now consider a company's size.
This means big companies have higher limits before needing extra scrutiny, while smaller ones stay under stricter rules.
Auditors will have clearer guidelines, and investors get more relevant information.
It's meant to make things easier for businesses and clearer for investors, signaling India's commitment to global standards.
Sebi is moving from a uniform to a scale-based threshold for related party transactions (RPTs).
Earlier, shareholder approval was needed for RPTs above Rs 1,000 crore or 10% of turnover.
Thresholds now vary with company turnover, simplifying disclosures for smaller RPTs.
Auditors gain a clearer measure for deciding what is considered material.
The reforms aim to make disclosures more relevant for investors.
- Who
- The Securities and Exchange Board of India (Sebi)
- What
- Adopted a scale-based approach for related party transactions (RPTs).
- When
- Recent board meeting
- Where
- India
- Why
- To ease doing business without compromising governance standards.
- Policy Change
- Scale-based thresholds mechanism for Related Party Transactions (RPTs)
- Previous Threshold
- Rs 1,000 crore or 10% of consolidated turnover
- Focus
- Proportionality instead of uniformity
- Impact on Auditors
- Clearer yardstick to determine materiality
- Benefit for Investors
- More precise, relevant disclosures