RELATED PARTY TRANSACTION REGIME – CRITICAL ASPECTS

Securities and Exchange Board of India (“SEBI”) has recently introduced significant changes in the regime governing related parties transactions (“RPT”) vis-à-vis listed entities provided under the SEBI (Listing Obligations and Disclosure Requirements), 2015 (“Listing Regulations”). Most prominent changes include revision of the definition of ‘related party', the transaction falling within the ambit ‘related party transactions' and amendment in the materiality thresholds.

The definition of the term ‘related party' has been widened to include (i) all the entities forming part of the promoter and promoter group notwithstanding whether or not they hold any shares in the listed entity as well as (ii) any shareholder holding more than 20 percent in the shareholding of the listed entity whether directly or indirectly i.e. large shareholders. Owing to aforesaid revision in the definition of ‘related party', the large shareholders including private equity, financial