Revolutionizing RPT Compliance

The Securities and Exchange Board of India (Sebi) has introduced a groundbreaking proposal to adjust the materiality thresholds for related party transactions (RPTs) based on the turnover of listed entities. This move aims to reduce the compliance burden on larger firms, making the process more equitable across the board.

New Thresholds Unveiled

Under the new framework, companies with an annual consolidated turnover up to Rs 20,000 crore will see RPTs considered material if they exceed 10% of their turnover. For those with turnovers between Rs 20,001 crore and Rs 40,000 crore, the threshold is set at Rs 2,000 crore plus 5% of the turnover exceeding Rs 20,000 crore. The largest firms, with turnovers above Rs 40,000 crore, will have a limit of Rs 3,000 crore plus 2.5% of the incremental turnover, capped at Rs 5,000 crore to protect minority shareholders.

Streamlining Disclosures

Sebi also proposes simplifying disclosure requirements for smaller RPTs, where transactions do not exceed 1% of the annual consolidated turnover or Rs 10 crore, whichever is lower. This adjustment is part of Sebi's efforts to make compliance more manageable for companies of all sizes.

Public Feedback Invited

The regulator is seeking public comments on these proposed changes until August 25, marking a significant step towards more tailored and efficient regulatory practices.