In a consultation paper released on Monday, the Securities and Exchange Board of India (SEBI) has proposed relaxing the threshold for which companies need to seek shareholder approval for related-party transactions (RPT) and their disclosure of the same.

The market regulator has proposed a system based on the firm's annual turnover. This system would raise the transaction threshold for seeking shareholder approval to up to Rs 5,000 crore from the current limit of Rs 1000 crore.

Further, SEBI has also proposed doing away with disclosure requirements for related party transactions valued at less than Rs 15 crore.

The domestic capital market regulator has been reviewing disclosure requirements for companies in several categories, including sustainability disclosures and those related to transactions between interconnected entities known as related parties.

SEBI stated that the aforesaid proposed threshold was back tested with RPT data for the FY24 and FY25 of top 100 listed entities on NSE, based on turnover.

Based on the analysis of data for FY24 and FY25 after applying the proposed thresholds, it was observed that the number of material RPTs requiring shareholders’ approval have considerably reduced by approximately 60%, thereby facilitating ease of reporting requirements for these listed entities.