Sebi's revised related-party disclosure rules split opinion

The revised rules mandate extensive information sharing with audit committees and shareholders

- Neha Joshi

The Securities and Exchange Board of India's revised framework for disclosures regarding related-party transactions may cause regulatory confusion, besides adding to compliance complexity and administrative burden, according to legal and governance professionals. The new rules, notified by a circular on 26 June, will be effective 1 September.

Under Regulation 23 of Sebi's Listing Obligations and Disclosure Requirements (LODR), listed companies must obtain approval from their audit committees—and in case of material transactions, from shareholders as well—for related-party transactions.

Sebi has introduced a three-tiered disclosure format: Part A covers all transactions; Part B applies to seven types, including loans and guarantees; and Part C mandates additional disclosures for material transactions.