Securities and Exchange Board of India on Friday eased disclosures and approvals for small related party transactions and approved the introduction of scale-based thresholds for RPT disclosures, based on annual consolidated turnover for determining material transactions.
The SEBI board that met on Friday also revised the thresholds for approval by audit committees in the case of RPTs by subsidiaries, while requiring firms to make fewer RPT disclosure.
For entities with annual consolidated turnover of up to ₹20,000 crore the threshold for materiality for shareholder approval is 10 per cent of the turnover, for consolidated turnover in the range ₹20,001-40,000 crore, the threshold is ₹2,000 crore plus 5 per cent of the turnover above ₹2,000 crore, and for those with annual consolidated turnover above ₹40,000 crore the materiality threshold is ₹3,000 crore plus 2.5 per cent of the turnover above ₹40,000 crore or ₹5,000 crore, whichever is lower.
SEBI said that the threshold for prior approval of the audit committee of the listed entity for RPTs above ₹1 crore, undertaken by subsidiaries has been revised to remove ambiguity.
For a subsidiary that has audited financial statements, the threshold is 10 per cent of the annual standalone turnover of the subsidiary as per the last audited financial statements of the subsidiary or the scale-based threshold for material RPT of listed entity, whichever is lower.
For subsidiaries not having audited financial statements for a period of at least one year, the threshold is 10 per cent of the aggregate value of paid-up share capital and securities premium account of the subsidiary; or the scale-based threshold for material RPTs of listed entity, whichever is lower.
The regulator will be issuing a circular for specifying the minimum information to be provided to the audit committee and shareholders for the approval of the RPT which does not exceed 1 per cent of annual consolidated turnover of the listed entity or ₹10 crore, whichever is lower.
The audit committee can also grant omnibus approval for RPTs.