Industry Standards on Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction
Summary
This circular mandates listed entities to follow industry standards for minimum information disclosure when seeking audit committee and shareholder approval for related party transactions. It modifies the SEBI Master Circular to incorporate these standards into the requirements for both audit committee reviews and shareholder notices. The provisions come into effect on April 1, 2025, and are issued under the powers of the SEBI Act and LODR Regulations.
Text
Regulation 23(2), (3) and (4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 require related party transactions to be approved by the audit committee and by the shareholders, if material.
The Industry Standards Forum comprising representatives from ASSOCHAM, CII and FICCI has formulated industry standards for minimum information to be provided for review of the audit committee and shareholders for approval of RPTs.
The industry associations which are part of ISF (ASSOCHAM, FICCI, and CII) and the stock exchanges shall publish the industry standards on their websites.
The listed entities shall follow the aforesaid industry standards to ensure compliance with Part A and Part B of Section III-B of the Master Circular read with Regulation 23(2), (3) and (4) of LODR Regulations.
The listed entity shall provide the audit committee with the information as specified in the Industry Standards on “Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction”, while placing any proposal for review and approval of an RPT.
The notice being sent to the shareholders seeking approval for any RPT shall, in addition to the requirements under the Companies Act, 2013, include the information as part of the explanatory statement as specified in the Industry Standards on “Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction”.
This circular shall come into effect from April 1, 2025.
The Stock Exchanges are advised to bring the contents of this circular to the notice of their listed entities and ensure its compliance.
This circular is issued in exercise of the powers conferred under Section 11(1) and 11A of the Securities and Exchange Board of India Act, 1992 read with regulation 101 of LODR Regulations.
Source: SecMarx — Industry Standards on Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.