SEBI Makes Rules Clearer for Company Deals, Balancing Big Disclosures with Relief for Small Ones
SDG 8: Decent Work and Economic Growth | SDG 16: Peace, Justice, and Strong Institutions
Institutions: Ministry of Finance
The market regulator, the Securities and Exchange Board of India (SEBI), has issued new rules on how publicly traded companies must get approval for deals with their own insiders (Related Party Transactions, or RPTs). The goal is to make sure these deals are fair to ordinary investors. Companies must now provide the Audit Committee and shareholders with very specific details, including a clear explanation of why the deal benefits the company, along with any official valuation reports. This is to prevent conflicts of interest. Crucially, SEBI introduced a major simplification: it has eased the strict disclosure rules for smaller deals. Any RPT that falls below 1% of the annual consolidated turnover or βΉ10 crore (whichever is lower) is now exempt from these detailed requirements.
These changes immediately strengthen the rules for corporate governance, ensuring that key company watchdogs (the Audit Committee) and the public have standardized, easy-to-understand disclosures. This directly boosts market trust and protects small investors against unfair deals, which is key to maintaining a transparent and fair capital market.
What is a Related Party Transaction (RPT)? An RPT is a business deal between a company and a person or entity considered a βrelated partyββlike the founder, a director, or a business they own. SEBI strictly regulates these transactions to stop company insiders from improperly benefiting at the expense of the company or its public shareholders.
Relevant Question for Policy Stakeholders: How will the newly defined disclosure thresholds balance the need for enhanced corporate governance without imposing excessive compliance costs on small and mid-cap listed entities?
Follow the full news here: https://www.sebi.gov.in/legal/circulars/oct-2025/minimum-information-to-be-provided-to-the-audit-committee-and-shareholders-for-approval-of-related-party-transactions_97281.html