SEBI proposes to relax limits for approval, disclosure of related-party transactions

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India's markets regulator has proposed relaxing the threshold for which companies need to seek shareholder approval for related-party transactions and their disclosure, according to a discussion paper published on Monday.

The Securities and Exchange Board of India (SEBI) proposed a system based on the firm's annual turnover that would raise the transaction threshold for seeking shareholder approval to up to 50 billion rupees ($570.7 million) from the current limit of 10 billion rupees.

Additionally, SEBI has proposed that companies need not disclose related party transactions valued at less than 150 million rupees anymore.

The regulator, under recently appointed chair Tuhin Kanta Pandey, has been reviewing disclosure requirements for companies in several categories, including sustainability disclosures and those related to transactions between interconnected entities known as related parties.

The proposed related-party norms, when applied to the top 100 listed firms on the National Stock Exchange of India in the previous two fiscal years, slashed the number of such transactions requiring shareholder approval by around 60%, SEBI said.