Disclosure obligations of listed entities in relation to Related Party Transactions

Last updated: 23 November 2021

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Listed entities in India now have updated disclosure obligations regarding Related Party Transactions (RPTs). These changes, effective from April 1, 2022, require detailed information to be presented to the audit committee for approval, including the nature, value, and justification of the transaction. Shareholders will also receive enhanced information in explanatory statements for RPT approvals. Additionally, listed entities must report RPT disclosures every six months to the stock exchange.

Securities and Exchange Board of India CIRCULAR SEBI/HO/CFD/CMD1/CIR/P/2021/662 November 22, 2021 To, All entities that have listed their specified securities All the Recognized Stock Exchanges Madam / Sir, Subject: Disclosure obligations of listed entities in relation to Relat

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FAQ :

Listed entities must now submit disclosures of Related Party Transactions (RPTs) to stock exchanges in a specified format. They must also provide detailed information to their audit committee for approval and include enhanced details in shareholder notices.

These provisions shall come into force with effect from April 1, 2022.

The audit committee must review the type and terms of the transaction, the related party's details and relationship, the transaction's tenure and value, its percentage of consolidated turnover, justification for the RPT, and any valuation reports relied upon.

Shareholders must receive a summary of the information provided to the audit committee, the justification for the RPT, details on loans or investments if applicable, and a statement that valuation reports will be made available.

Listed entities shall make RPT disclosures every six months in the format provided.