Industry Standards on Minimum Information for Audit Committee
Industry Standards on Minimum Information for Audit Committee and Shareholders for Approval of Related Party Transactions (RPTs)
Background:
- SEBI’s LODR Regulations (Regulation 23) mandate that RPTs require approval from the audit committee and, if material, from shareholders. The SEBI Master Circular (November 11, 2024) specifies information to be provided for such approvals.
Industry Standards:
- The Industry Standards Forum (ISF), comprising ASSOCHAM, FICCI, and CII, in consultation with SEBI, formulated standards for minimum information to be provided to the audit committee and shareholders for RPT approvals.
- Initially, these standards were set to apply from April 1, 2025 (per February 14, 2025 Circular), but the timeline was extended to July 1, 2025, following stakeholder feedback for simplification (March 21, 2025 Circular).
Revised Standards:
- ISF revised the RPT Industry Standards after considering feedback, in consultation with SEBI.
- The revised standards modify Section III-B of the Master Circular, effective from September 1, 2025:
- Audit Committee (Part A): Listed entities must provide information as per the RPT Industry Standards for RPT approval.
- Shareholders (Part B): Notices to shareholders seeking RPT approval must include information as per the RPT Industry Standards, in addition to Companies Act, 2013 requirements.
Compliance:
- From September 1, 2025, listed entities must follow the revised RPT Industry Standards to comply with LODR Regulations and the Master Circular.
Responsibilities of ISF and Stock Exchanges:
- Publish the RPT Industry Standards on their websites.
- Prepare and publish FAQs, addressing stakeholder queries, in consultation with SEBI.
Effective Date and Supersession:
- The circular is effective from September 1, 2025.
- It supersedes the February 14, 2025, and March 21, 2025, circulars.
Authority:
- Issued under Section 11(1) and 11A of the SEBI Act, 1992, and Regulation 101 of LODR Regulations.
- Available on SEBI’s website under “Legal → Circulars.”
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