Sebi comes out with disclosure obligations of listed entities on related party transactions

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Draft RPT disclosures for listed companies released

New Delhi. Capital markets regulator SEBI has issued a draft information on Related Party Transactions (RPTs) by listed companies before the audit committee and shareholders. The Securities and Exchange Board of India (SEBI) has said in a circular that a listed company will have to prove how a transaction has been in its interest. In addition, he will have to place a copy of the valuation or the report of another outside party before the audit committee or the shareholders for approval. In addition, the listed company shall also inform the Audit Committee about the percentage of annual integrated turnover of the other party in relation to the proposed transaction price.

These provisions of SEBI will be applicable to those companies which are listed on recognized stock exchange. They will have to give RPT disclosures every six months. The new disclosure format will come into effect from April 1, 2022. SEBI has said in its circular that the type, context and details of the disclosures to be made in the information to be given to the audit committee for permission of a proposed RPT. Apart from this, the listed company will also have to specify the duration of the transaction and its value. “The audit committee will also review the existing status of RPTs for more than one year on an annual basis,” Sebi said.

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