## Report on SEBI Circular SEBIHOCFDCFDPoD2PCIR202593 Regarding Industry Standards on Related Party Transactions
**1. Executive Summary:**
This report analyzes SEBI Circular SEBIHOCFDCFDPoD2PCIR202593, issued on June 26, 2025. This circular amends existing regulations concerning the information required for Audit Committee and Shareholder approval of Related Party Transactions (RPTs). The key purpose of the amendment is to incorporate revised Industry Standards developed by an Industry Standards Forum (ISF) in consultation with SEBI, addressing feedback from stakeholders to simplify the standards. The circular modifies Section IIIB of the SEBI Master Circular, specifies the information requirements for Audit Committees and Shareholders, and mandates compliance from September 01, 2025.
**2. Introduction:**
This report provides an overview and analysis of SEBI Circular SEBIHOCFDCFDPoD2PCIR202593, based solely on the content of the provided text. The report aims to inform affected parties about the changes to regulations surrounding Related Party Transactions (RPTs) and the information requirements for their approval.
**3. Policy Overview:**
This circular serves as an amendment to existing regulations outlined in:
* Regulation 23(2, 3 & 4) of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015 (LODR Regulations)
* Section IIIB of SEBI Master Circular dated November 11, 2024
The core objective of this amendment, as stated in the text, is to provide a *standard format for minimum information* to be provided to the Audit Committee and Shareholders for approval of RPTs.
**4. Background and Rationale:**
This amendment addresses feedback and requests from stakeholders who sought simplification of the existing Industry Standards on Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions (RPT). The original Industry Standards required listed entities to follow with effect from April 01, 2025 (later extended to July 01, 2025) which was referred to ISF for consideration and review, indicating that the initial standards were perceived as potentially overly complex or burdensome, necessitating revisions for practical application.
**5. Key Provisions / Changes:**
This circular specifically amends Section IIIB of the Master Circular. The key changes are:
* **Paragraph 4 under Part A of Section IIIB (Information for the Audit Committee) is replaced:** The original requirement is replaced with a mandate to provide the Audit Committee with information as specified in the *revised* "Industry Standards on Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions." This change emphasizes adherence to the new, simplified Industry Standards.
* **Paragraph 6 under Part B of Section IIIB (Information for Shareholders) is replaced:** The original requirement is replaced with a mandate that the notice sent to shareholders seeking approval for any RPT must include information, as part of the explanatory statement, as specified in the *revised* "Industry Standards on Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transactions", in addition to requirements under the Companies Act, 2013. This change ensures shareholders receive the information as per the updated Industry Standards, further emphasizing transparency and informed decision-making.
The effect of these changes is to replace the previous informational requirements for RPT approval with the new, presumably simpler, requirements outlined in the revised Industry Standards. This aims to streamline the process and ensure stakeholders receive the information necessary to evaluate RPTs effectively.
**6. Target Audience and Stakeholders:**
Based on the provided text, the directly affected parties include:
* All listed entities
* The recognized Stock Exchanges
* The Associated Chambers of Commerce and Industry of India (ASSOCHAM)
* Federation of Indian Chambers of Commerce and Industry (FICCI)
* Confederation of Indian Industry (CII)
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** SEBI, Stock Exchanges, and the Industry Standards Forum (ISF) comprising ASSOCHAM, FICCI, and CII. The stock exchanges are responsible for communicating the circular to listed entities.
* **Timeline:** The circular is effective from **September 01, 2025**.
* **Specifically related to the amendments:** Listed entities are required to follow the RPT Industry Standards from September 01, 2025. Industry associations (ASSOCHAM, FICCI, CII) and stock exchanges are required to publish the revised RPT Industry Standards on their websites and prepare FAQs (in consultation with SEBI) addressing stakeholder queries, placing them on their respective websites.
**8. Expected Outcomes / Impact of Changes:**
The intended outcome of these specific changes is to improve the efficiency and clarity of the RPT approval process. By adopting the revised Industry Standards, the process should be streamlined, ensuring that Audit Committees and Shareholders receive the most relevant and understandable information to make informed decisions. The simplification of the Industry Standards should also reduce the compliance burden on listed entities. The publishing of FAQs will further clarify the new requirements and address potential ambiguities.
**9. Conclusion:**
SEBI Circular SEBIHOCFDCFDPoD2PCIR202593 introduces important amendments to the regulations governing Related Party Transactions. The adoption of revised Industry Standards, effective September 01, 2025, seeks to streamline and clarify the information requirements for Audit Committee and Shareholder approval. These amendments aim to improve the efficiency and transparency of the RPT process, reducing compliance burdens and facilitating informed decision-making by stakeholders. It is crucial that listed entities and relevant organizations understand and implement these changes to ensure compliance and effective governance of RPTs.
Key Entities Referenced
SEBI Listing Obligations and Disclosure Requirements Regulations, 2015: Regulations governing listing obligations and disclosure requirements for listed entities.
LODR Regulations: Abbreviation for SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.
Related Party Transactions: Transactions between related parties that require audit committee and shareholder approval.
SEBI Master Circular dated November 11, 2024: A circular issued by SEBI providing guidance on related party transactions.
Industry Standards Forum: A forum comprising representatives from industry associations that formulates industry standards.
ASSOCHAM: The Associated Chambers of Commerce and Industry of India, an industry association.
FICCI: Federation of Indian Chambers of Commerce and Industry, an industry association.
CII: Confederation of Indian Industry, an industry association.
Industry Standards on Minimum information to be provided to the Audit Committee and Shareholders for approval of Related Party Transaction: Industry standards formulated by the Industry Standards Forum (ISF) in consultation with SEBI
Companies Act, 2013: An act of the Parliament of India that regulates Indian companies.
Securities and Exchange Board of India Act, 1992: An act of the Parliament of India that established the Securities and Exchange Board of India
Rajesh Kumar Dangeti: Chief General Manager, Corporation Finance Department at SEBI.
Section 111 and 11A of the Securities and Exchange Board of India Act, 1992: Sections of the Securities and Exchange Board of India Act, 1992 granting SEBI certain powers.
CIRCULAR
SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/93 June 26, 2025
To,
All listed entities
All the recognized Stock Exchanges
The Associated Chambers of Commerce and Industry of India (ASSOCHAM)
Federation of Indian Chambers of Commerce and Industry (FICCI)
Confederation of Indian Industry (CII)
Dear Sir/Madam,
Sub: Industry Standards on “Minimum information to be provided to the Audit
Committee and Shareholders for approval of Related Party Transactions”
1. Regulation 23(2), (3) and (4) of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (“LODR Regulations”) require related party
transactions (“RPTs”) to be approved by the audit committee and by the
shareholders, if material. Part A and Part B of Section III-B of SEBI Master Circular
dated November 11, 20241 (“Master Circular”) specify the information to be placed
before the audit committee and shareholders, respectively, for consideration of
RPTs.
2. Accordingly, Industry Standards Forum (“ISF”) comprising of representatives from
three industry associations, viz. ASSOCHAM, CII and FICCI, under the aegis of
the Stock Exchanges, in consultation with SEBI, formulated the Industry Standards
on “Minimum information to be provided for review of the audit committee and
shareholders for approval of a related party transaction” (“Industry Standards”).
3. SEBI vide Circular dated February 14, 2025 (link) (“the Circular”) required listed
entities to follow aforesaid Industry Standards with effect from April 01, 2025.
4. The objective of these Industry Standards is to provide a standard format for
minimum information to be provided to the Audit Committee and Shareholders (as
applicable) for approval of RPTs.
1 Master circular for compliance with the provisions of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 by listed entities.
Page 1 of 35. Pursuant to feedback and requests received from various stakeholders, SEBI vide
Circular dated March 21, 2025 (link) extended the timeline for applicability of the
Industry Standards to July 01, 2025 and referred the feedback received for
simplification of the Industry Standards to ISF for consideration and review of
existing Industry Standards.
6. ISF considered the feedback, and in consultation with the SEBI, came out with the
revised Industry Standards on “Minimum information to be provided to the Audit
Committee and Shareholders for approval of Related Party Transactions (“RPT
Industry Standards”).
7. Accordingly, Section III-B of the Master Circular shall stand modified as under from
the effective date of this circular:
7.1. Paragraph 4 under Part A of Section III-B shall stand substituted by the
following paragraph:
“The listed entity shall provide the audit committee with the information as
specified in the Industry Standards on “Minimum information to be provided to
the Audit Committee and Shareholders for approval of Related Party
Transactions”, while placing any proposal for review and approval of an RPT.”
7.2. Paragraph 6 under Part B of Section III-B shall stand substituted by the
following paragraph:
“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 to the Audit Committee
and Shareholders for approval of Related Party Transactions.”
8. The listed entities, from the effective date of this Circular, shall follow the
aforesaid RPT 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.
9. The industry associations which are part of ISF (ASSOCHAM, FICCI, and CII)
and the stock exchanges shall:
9.1. Publish the RPT Industry Standards on their respective websites.
9.2. Prepare FAQs on RPT Industry Standards in consultation with the SEBI. The
FAQs shall take into consideration the queries/clarifications etc. received
from the stakeholders.
9.3. Place aforesaid FAQs on their respective websites.
Page 2 of 310. This circular shall come into effect from September 01, 2025.
11. The instant Circular supersedes the Circular no. SEBI/HO/CFD/CFD-PoD-
2/P/CIR/2025/18 dated February 14, 2025 and Circular no. SEBI/HO/CFD/CFD-
PoD-2/P/CIR/2025/37 dated March 21, 2025.
12. The Stock Exchanges are advised to bring the contents of this Circular to the
notice of their listed entities.
13. 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.
14. This Circular is available on SEBI website at www.sebi.gov.in under the category:
‘Legal → Circulars’.
Yours faithfully,
Rajesh Kumar Dangeti
Chief General Manager
Corporation Finance Department
Tel. No.: +91 22 2644 9500
Email id: rajeshkd@sebi.gov.in
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