The Securities and Exchange Board of India (“SEBI”) recently amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “LODR”) by notifying the SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2025 (the “Amendment Regulations”) on 18 November 2025. The Amendment Regulations revise the related party transactions (“RPTs”) framework for listed entities in line with the decisions taken by SEBI at its board meeting held on 12 September 2025. Prior to the SEBI board meeting, these amendments were referred to an advisory committee and a consultation paper was also issued by SEBI for public comments on 4 August 2025 for this purpose (the “Consultation Paper”).

Key changes & clarifications under Amendment Regulations

I. Revised thresholds for determining ‘material’ RPTs for listed entities

• Prior shareholder approval needs to be obtained for any material RPTs undertaken by a listed entity as per the LODR. Prior to the Amendment Regulations, a RPT was considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year exceeded INR 10 billion or 10% (ten percent) of the listed entity’s consolidated turnover as per its last audited financial statements, whichever was lower.
• The Amendment Regulations introduce a new scale-based materiality threshold based on the turnover of the listed entity for determining material RPTs going forward. However, the materiality threshold for RPTs involving brand usage or royalty payments remain unchanged at 5% (five percent) of the annual consolidated turnover of the listed entity as per its last audited financial statements.

Annual consolidated turnover of listed entity	RPT Materiality Threshold (i.e., the threshold a proposed RPT must, individually or taken together with previous RPTs during a financial year, exceed)
Up to INR 200 billion	10% of annual consolidated turnover of listed entity
More than INR 200 billion to up to INR 400 billion	INR 20 billion + 5% of annual consolidated turnover of listed entity above INR 200 billion
More than INR 400 billion	INR 30 billion + 2.5% of annual consolidated turnover of listed entity above INR 400 billion or INR 50 billion, whichever is lower.

II. Revised thresholds for determining material RPTs for subsidiaries

• Prior to the Amendment Regulations, the LODR required all RPTs entered into by a subsidiary of a listed entity (to which such listed entity was not a party) to be approved by the audit committee of the listed entity if the aggregate value of the RPT (individually or together with previous RPTs in the financial year) exceeded 10% of the standalone turnover of such subsidiary as per the last audited financial statements of such subsidiary.

• The Amendment Regulations have liberalized this requirement and now provide that –

(i) no approval of the audit committee of the listed entity will be needed if the value of the RPT (whether individually or taken together with previous RPTs in the financial year) being undertaken by the subsidiary does not exceed INR 10 million; and
(ii) even if the RPT value exceeds INR 10 million, prior approval of audit committee of the listed entity will only be required if –

(a) for subsidiaries having audited financial statements, the value of the RPT (individually or together with previous RPTs in the financial year) exceeds the lower of –
o 10% of the annual standalone turnover of the subsidiary as per the audited financial statements; or
o the threshold for material RPTs applicable to the listed entity in accordance with Paragraph I above;
(b) for subsidiaries not having audited financial statements for a period of at least 1 (one) year, the value of the RPT (individually or together with previous RPTs in the financial year) exceeds the lower of –
o 10% of the paid-up share capital plus securities premium account of the subsidiary, calculated not more than 3 (three) months prior to date of seeking approval from the audit committee; or
o the threshold for material RPTs applicable to the listed entity in accordance with Paragraph I above.

III. Key clarifications on RPT framework

The Amendment Regulations also provide the following clarifications in relation to the RPT framework:
• any omnibus RPT approvals obtained from shareholders will remain valid till – (i) the date of the next annual general meeting that is held, if such approval was obtained at an annual general meeting; or (ii) 1 (one) year from the date on which the approval was granted, if such approval was obtained other than at an annual general meeting. Note that listed entities were already required to comply with this requirement basis a master circular issued by SEBI on 11 November 2024;
• retail purchases from a listed entity or its subsidiaries by its directors and employees, without establishing a business relationship and at uniformly applicable / offered terms to all employees and directors are not classified as RPTs under the LODR. The Amendment Regulations extend this exemption to now include purchases by key managerial personnel and relatives of directors as well as key managerial personnel. Employees have also been removed from the ambit of this exemption as they do not qualify as related parties to begin with; and

• the exemptions granted in relation to RPTs between a holding company and its wholly owned subsidiary (whose accounts are consolidated with the holding company and placed before its shareholders) only apply where the holding company is listed.

The Amendment Regulations are a welcome change and tie in with SEBI’s aim to promote ease of doing business for listed entities while maintaining a robust compliance framework and ensuring investor protection –

I. Ongoing push for ease of doing business for listed entities

• In June 2025, SEBI set out detailed industry standards regarding minimum information to be provided to the audit committee and shareholders while seeking approvals for RPTs. In October 2025, SEBI exempted RPTs not exceeding 1% of the annual consolidated turnover of listed entities or INR 100 million (whichever is lower) from these requirements and prescribed lesser information to be furnished for such RPTs. In addition, RPTs which (individually or together with previous RPTs in a financial year) do not exceed INR 10 million were also exempted from these minimum information requirements.
• The Amendment Regulations now further reduce RPT related compliances by introducing new scale-based thresholds, which if had been applicable for financial years 2023-24 and 2024-25, would have reduced the number of RPTs requiring shareholders’ approval by close to 60% for the top 100 entities listed on NSE based on turnover.

II. Ease of compliance for newly incorporated subsidiaries

• Due to linkage of RPT thresholds to audited financial statements, newly incorporated subsidiaries of listed companies often faced issues in determining their RPT approval related requirements. The carve-out introduced by the Amendment Regulations for subsidiaries without audited financial statements now provides clear guidance on when such approvals are needed.
• The Consultation Paper had initially suggested linking RPT thresholds of subsidiaries without audited financial statements to the standalone net worth of such subsidiary as certified by a practicing chartered accountant. However, the Amendment Regulations do not provide for such certification requirement and instead simplify the process by linking the RPT thresholds to the paid-up share capital and securities premium account of the subsidiary, which will be readily available.

1.Listed Entity means an entity which has listed, on a recognised stock exchange(s), the ‘Designated Securities’ issued by it or Designated Securities issued under schemes managed by it, in accordance with the listing agreement entered into between the entity and the recognised stock exchange(s).
Designated Securities means specified securities, non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts, securitised debt instruments, security receipts, units issued by mutual funds, zero coupon zero principal instruments and any other securities as may be specified by the Board.

2.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, 2024.

Authors: Neville Golwalla – Partner, Aanchal Kabra– Associates

Disclaimer: This alert only highlights key issues and is not intended to be comprehensive. The contents of this alert do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this alert should be considered an advertisement or solicitation of TT&A’s professional services. This communication is confidential and may be privileged or otherwise protected by work product immunity.