Related Party Transactions: Board Roles, Compliance Rules & Latest Amendments

Related Party Transactions: Board Roles, Compliance Rules & Latest Amendments

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Hello and welcome. I am Deepak Bhatt from Dess Digital. I would like to warmly welcome CS Rahul Prajapat. We are delighted to have him with us and look forward to a meaningful conversation on a very hot topic—Related Party Transactions. Rahul, the first question to you many of our professional colleagues find themselves in difficulty when it comes to handling related party transactions. What are your views on this?

Personally, I don’t find it very difficult. In fact, it’s an arena to boost our knowledge and expertise and an opportunity to dive into in-depth practical work scenarios.

That’s really great to hear. Moving ahead, if we need to understand the legal framework governing related party transactions in India, what should be our prime focus?

To get the real picture of RPTs, we need to thoroughly check Section 188 of the Companies Act, 2013, Rule 15 of the Companies (Meetings of Board and its Powers) Rules, and Section 2(76) and 2(77) of the Companies Act, 2013, which define related parties and their relatives. Additionally, Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations should be referred to, along with its amendments from time to time.

Talking about amendments, can you please share the latest updates regarding related party transactions?

Yes, recently SEBI introduced amendments on 24th November 2025, which brought around four to five key changes. The first change is related to Regulation 2(1)(zc), specifically clause (e). Earlier, it covered retail purchases by directors or employees without establishing a business relationship and on uniform terms. After the amendment, it now includes directors, key managerial personnel (KMP), and their relatives, thereby expanding the scope of exemptions and ensuring consistency in interpretation. Next is the limit of materiality. Previously, it was ₹1,000 crore or 10% of the annual consolidated turnover, whichever was lower. Now, the amendment introduces a flat ₹1,000 crore threshold along with turnover-based slabs to reduce compliance burden for large entities and ensure proportional materiality. Regarding audit committee approval, earlier approval was required if RPTs exceeded 10% of the subsidiary’s turnover. Now, if the listed company is not a party and the aggregate value is below a specified threshold, such transactions are exempt. This ensures only significant transactions require approval. Additionally, SEBI clarified that transactions between a listed holding company and its wholly owned subsidiary are exempt from approval. They also clarified that the holding company must be a listed entity, removing ambiguity and ensuring uniform interpretation. These amendments are effective from 19th December 2025.

That was a very exhaustive yet crisp explanation of the amendments. Thank you so much for shedding light on the recent SEBI changes related to RPTs. It was a great insight from your side, CS Rahul. Thank you for being part of our knowledge-sharing session.

Thank you so much.