SEBI Shakes Up Corporate Governance With New Threshold-Based Rules for Related Party Deals

India's market watchdog just dropped a regulatory grenade. The Securities and Exchange Board of India (SEBI) is tightening the screws on shady backroom deals with a new threshold-based framework for related party transactions.

No more wink-and-nod arrangements between board members and their cousins' shell companies. The proposed rules would force companies to disclose—and get approval for—any transaction crossing certain materiality thresholds.

Corporate India won't like this one bit. Expect howls about 'red tape' from executives who've grown fat on sweetheart deals. But for minority shareholders? This could finally level the playing field—or at least make the insiders work slightly harder to fleece them.

Because let's face it: in the world of finance, if there's no blood in the water, you're probably not the shark.

Upper ceiling

In order to protect the interests of minority shareholders, an absolute threshold of ₹5,000 crore as an upper ceiling has been proposed for listed entities having turnover above ₹40,000 crore.

Under the current SEBI listing obligations and disclosure requirements norms, a listed entity is required to consider an RPT as material if the transaction, either individually or taken together with previous transactions during a financial year, exceeds ₹1,000 crore or 10 per cent of the entity’s annual consolidated turnover, whichever is lower, as per its last audited financial statements.

The proposal follows representations made by stakeholders about the challenges with the existing norms, such as requiring shareholder approval for RPTs exceeding ₹1,000 crore or 10 per cent of the consolidated turnover — which is onerous for listed entities with high turnover.

SEBI has also suggested a simplified set of disclosures to be submitted to the audit committee if the total value of RPTs with a related party in a financial year .

Further, SEBI has also proposed changes related to omnibus approvals for RPTs.

Published on August 4, 2025