INSITE - India- June 2025

SEBI ISSUES REVISED INDUSTRY STANDARDS FOR RELATED PARTY TRANSACTION DISCLOSURES, EFFECTIVE SEPTEMBER 2025

Summary: The Securities and Exchange Board of India (SEBI) has issued a circular introducing revised Industry Standards for disclosures related to Related Party Transactions (RPTs), effective from September 1, 2025. Developed by the Industry Standards Forum (ISF) in consultation with SEBI, these standards aim to simplify and standardize information shared with audit committees and shareholders. The new circular replaces earlier ones, and ISF bodies and stock exchanges will publish the standards and FAQs for stakeholder guidance.

In Detail: The SEBI has issued a circular introducing revised Industry Standards for Minimum Information to be Provided to the Audit Committee and Shareholders for Approval of RPTs. This significant update aims to enhance transparency and uniformity in disclosures made by listed entities regarding RPTs.

These standards have been formulated by the ISF, a collaborative body comprising key industry associations including ASSOCHAM, CII, and FICCI in close consultation with SEBI. The initiative is part of SEBI’s broader effort to streamline compliance under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, particularly with respect to approval processes involving related party dealings.

Initially released for public and stakeholder consultation, the draft standards were met with constructive feedback, following which SEBI extended the implementation timeline. The revised and simplified version of the standards is designed to facilitate ease of compliance while maintaining robust governance practices.

Key Highlights:

• The standards aim to standardize the format and content of information submitted to audit committees and shareholders when seeking approval for RPTs.

• They are mandatory for all listed entities for RPT proposals submitted to audit committees and for shareholder notices from September 01, 2025, onward.

• The ISF and stock exchanges will publish the finalized standards on their respective websites and will also prepare a set of Frequently Asked Questions (FAQs) to assist companies and other stakeholders in implementing the new requirements.

Listed entities are advised to familiarize themselves with these new standards well in advance and align their internal processes accordingly to ensure smooth compliance from the effective date.

Key Links:  SEBI | Industry Standards on “Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions”