Business - August 5, 2025

SEBI propose to relax threshold.

team maverick August 5, 2025

0 3 min read

The Securities and Exchange Board of India (SEBI) on Monday has proposed that low-value transactions between interconnected entities, or “related parties”, no longer need to be disclosed and that only some of such high-value deals need shareholder approval. These proposals are part of the SEBI’s relook at the required disclosures on labour, environment and other issues as it seeks “optimal regulations” under recently appointed chairman, Tuhin Kanta Pandey.

The regulator has now proposed that companies no longer need to disclose related-party transactions that have a value of less than 150 million rupees (about $1.70 million). While they will still have to report transactions above this value, it has proposed a revenue-based graded approach to determine which of these deals will require approval from minority shareholders.

For example, a company with an annual turnover of more than 300 billion rupees will need shareholder clearance for a related-party transaction worth more than 25 billion rupees ($285 million). However, shareholders would need to clear every related-party transaction worth more than 50 billion rupees (about $570 million). That threshold, though, is five times higher than the current one of 10 billion rupees.

This increase would have meant 60% of the related-party deals among the top 100 listed firms on the National Stock Exchange in the last two fiscal years would not have to require shareholders’ approval, according to the SEBI’s calculations, which will ease compliance burden on listed entities, rendering some flexibility and reduce timelines for related-party transactions, according to an industry expert.

This approach marks SEBI is poised for a new horizon, in comparison to the previous SEBI’s modus operandi, when rules around related-party transactions were ‘only tightened’ and disclosure requirements were increased.

Since taking over as SEBI chairman in March, Pandey has sought to revert the disclosure paraphernalia and opt for “honest” disclosures.

Team Maverick