SEBI clarification regarding Disclosure obligations of listed entities in relation to Related Party Transactions

The Securities Exchange Board of India vide circular dated November 22, 2021 has issued clarification regarding Disclosure obligations of listed entities in relation to Related Party Transactions. The listed entity shall provide the following information, for review of the audit committee for approval of a proposed RPT;

1. Type, material terms and particulars of the proposed transaction;
2. Name of the related party and its relationship with the listed entity or its subsidiary, including nature of its concern or interest (financial or otherwise);
3. Tenure of the proposed transaction(particular tenure shall be specified);
4. Value of the proposed transaction;
5. The percentage of the listed entity’s annual consolidated turnover, for the immediately preceding financial year, that is represented by the value of the proposed transaction (and for a RPT involving a subsidiary, such percentage calculated on the basis of the subsidiary’s annual turn over on a stand alone basis shall be additionally provided);
6. If the transaction relates to any loans, inter-corporate deposits, advances or investments made or given by the listed entity or its subsidiary: Details of the source of funds in connection with the proposed transaction and where any financial indebtedness is incurred to make or give loans, inter-corporate deposits, advances or investments, nature of indebtedness; cost of funds; and tenure; along with applicable terms, including covenants, tenure, interest rate and repayment schedule, whether secured or unsecured; if secured, the nature of security; and the purpose for which the funds will be utilized by the ultimate beneficiary of such funds pursuant to the RPT.
7. Justification as to why the RPT is in the interest of the listed entity;
8. Copy of the valuation or other external party report, if any such report has been relied upon;
9. Percentage of the counter-party’s annual consolidated turnover that is represented by the value of the proposed RPT on a voluntary basis.

This Circular shall come into force with effect from April 1, 2022.