SEBI Update : Disclosure obligations of listed entities in relation to Related Party Transactions (RPT)

Dear All,

This is in addition to changes introduced by SEBI in Regulation 23 of 

Listing Obligations and Disclosure Requirement (LODR) on November 9, 2021.

SEBI vide circular dated November 22, 2021 has prescribed the

–          Information to be reviewed by the Audit Committee for approval of RPTs and

–          Information to be provided to shareholders for consideration of RPTs

and

–         Format for reporting of RPTs to the Stock Exchange

https://www.sebi.gov.in/sebi_data/commondocs/nov-2021/Annexure%20-%20I%20-%20Circular-%20Disclosure%20obligations%20of%20listed%20entities%20in%20relation%20to%20RPTs_p.PDF

Information to be reviewed by Audit Committee includes details of :

·       Proposed Transactions: Type, material terms and particulars, Value and Tenure

·       Related Party : Name its relationship with the listed entity or its subsidiary, including nature of its concern or interest (financial or otherwise)

·       If transaction relates to loans, inter corporate deposits, advances or investments made or given :

source of funds, Where any financial indebtedness is incurred to make or give loans, inter- corporate deposits, advances or investments, nature of indebtedness; cost of funds; and tenure, Applicable terms, including covenants, tenure, interest rate and repayment schedule, whether secured or unsecured; if secured, the nature of security and the purpose for which the funds will be utilized by the ultimate beneficiary of such funds.

·       Justification as to why the RPT is in the interest of the listed entity;

·       A  copy  of  the  valuation  or other  external  party  report,  if  any  such  report  has  been relied upon;

·       Percentage  of  the  counter-party’s annual consolidated turnover that  is represented by the value of the proposed RPT on a voluntary basis;

·       Any other information that may be relevant

Information to be provided to shareholders for consideration of RPTs

·       Summary of information provided to Audit Committee

·       Justification for why the proposed transaction is in the interest of the listed entity;

·       Where  the  transaction  relates  to  any  loans,  inter-corporate  deposits,  advances  or investments made or given by the listed entity or its subsidiary, the details specified under point4(f) above; (The requirement  of  disclosing  source  of funds  and  cost  of funds shall not be applicable to listed banks/NBFCs.)

·       A statement that the valuation or other external report, if any, relied upon by the listed entity  in  relation  to  the  proposed  transaction  will  be made available  through  the registered email address of the shareholders;

·       Percentage  of  the  counter-party’s annual consolidated turnover that  is represented by the value of the proposed RPT, on a voluntary basis

·       Any other information that may be relevant.

The effective date of the circular is 01st April, 2022.

You may find the original circular at :

https://www.sebi.gov.in/web/?file=https://www.sebi.gov.in/sebi_data/attachdocs/nov-2021/1637634698609.pdf#page=3&zoom=page-width,-16,761