Business Desk MUMBAI

SEBI has introduced a threshold-based framework to determine the materiality of related party transactions, based on the annual consolidated turnover of the listed entity. It has revised thresholds for approval by audit committees for RPTs undertaken by subsidiaries and simplified disclosure requirements for smaller related party transactions, PTI reported.

  The new norms are aimed at addressing practical challenges, removing ambiguities, and striking a balance between investor protection and EoDB under the listing obligations and disclosure requirements. Entities with turnover up to Rs 20,000 crore, a transaction will be considered material if it exceeds 10% of the annual consolidated turnover, Sebi said in a notification. In the case of entities with turnover between Rs 20,001 crore and Rs 40,000 crore, the threshold would be Rs 2,000 crore plus 5% of the turnover exceeding Rs 20,000 crore. 

For entities with turnover exceeding Rs 40,000 crore, the threshold will be Rs 3,000 crore plus 2.5 per cent of the turnover exceeding Rs 40,000 crore, or Rs 5,000 crore, whichever is lower. To protect the interests of minority shareholders, an absolute threshold of Rs 5,000 crore as an upper ceiling has been notified for listed entities having a turnover above Rs 40,000 crore.