Following are the key takeaways:

1. Regulation 23(2), (3), and (4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) mandate that related party transactions (“RPTs”) be approved by the audit committee, and by shareholders if the transactions are deemed material. Part A and Part B of Section III-B of the SEBI Master Circular dated November 11, 2024 (“Master Circular”) outline the information to be provided to the audit committee and shareholders, respectively, for the consideration of RPTs.

2. To assist listed entities in adhering to these requirements and ensuring a consistent approach, the Industry Standards Forum (“ISF”), comprising representatives from three industry associations—ASSOCHAM, CII, and FICCI—has developed industry standards in collaboration with SEBI. These standards specify the minimum information to be presented to the audit committee and shareholders for the approval of RPTs. The ISF members (ASSOCHAM, FICCI, and CII) and the stock exchanges will publish these industry standards on their respective websites.

3. Listed entities are required to follow these industry standards to comply with Part A and Part B of Section III-B of the Master Circular, in conjunction with Regulation 23(2), (3), and (4) of the LODR Regulations.

4.  Section III-B of the Master Circular shall stand modified as given below: 

4.1.Paragraph 4 under Part A of Section III-B shall stand substituted by the following paragraph: 

“The listed entity shall provide the audit committee with the information as specified in the Industry Standards on “Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction”, while placing any proposal for review and approval of an RPT.” 

4.2.Paragraph 6 under Part B of Section III-B shall stand substituted by the following paragraph: 

“The notice being sent to the shareholders seeking approval for any RPT shall, in addition to the requirements under the Companies Act, 2013, include the information as part of the explanatory statement as specified in the Industry Standards on “Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction”.”

5.  The circular shall come into effect from April 1, 2025

6. Stock Exchanges are required to bring the contents of this circular to the notice of their listed entities and ensure its compliance.