SEBI Has Amended The SEBI LODR Regulations With Significant Changes In The RPT Framework

The Securities and Exchange Board of India (“SEBI”) vide notification No. SEBI/LAD-NRO/GN/2025/273 dated 18.11.2025 (published in the Official Gazette on 19.11.2025), has notified the SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2025 (“LODR Amendment Regulations”)¹ to amend Regulations 2, 23, 12, 53 and 58 and Schedule I of the SEBI (Listing Obligations and Disclosure Requirements), 2015. Further, a new Schedule XII has been added.

While some of the provisions of the LODR Amendment Regulations have come into force on the date of publication, however, provisions related to related party transactions definitions and thresholds including the new Schedule XII shall come into force on the 30th day from the date of publication in the Official Gazette i.e., 18.12.2025.

The key updates introduced by the LODR Amendment Regulations are as follows:

(a) Related Party Transactions (“RPT”) Definition:

With effect from 18.12.2025, the LODR Amendment Regulations amend Regulation 2(1)(zc) to expand the exclusion criteria for “retail purchases” (i.e., transactions not treated as RPTs) made by the listed entity or its subsidiary. The phrase “its directors or its employees” is replaced with “the directors or key managerial personnel of the listed entity or its subsidiary, and relatives of such directors or key managerial personnel”. The list of beneficiaries for whom the terms are uniformly applicable is updated to include “employees, directors, key managerial personnel and relatives of directors or key managerial personnel”.

(b) Materiality threshold and approval for Related Party Transactions:

1. With effect from 18.12.2025, the existing materiality threshold under Regulation 23(1) (i.e., INR 1,000 Crores or ten percent of consolidated turnover, whichever is lower) shall be replaced with the thresholds now specified in the newly inserted Schedule XII. Schedule XII states that a transaction with a related party shall be considered material, if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year exceed the following:
   
   

   S No	Consolidated Turnover of Listed Entity	Threshold
   1	Upto INR 20,000 Crores	10% of the annual consolidated turnover of the listed entity
   2	More than INR 20,000 Crores to 10% of the annual consolidated turnover listed entity upto INR 40,000 Crores	INR 2,000 Crores + 5% of the annual consolidated turnover
   3	More than INR 40,000 Crores	INR 3,000 Crores + 2.5% of the annual consolidated turnover or INR 5000 Crores, whichever is lower.

   
   For computing the above thresholds, the annual consolidated turnover of the listed entity shall be determined based on the last audited financial statements of the listed entity.
2. Materiality Threshold for Subsidiaries under Regulation 23(2) applicable with effect from 18.12.2025:

A. As per the LODR Amendment Regulations, prior approval of the audit committee of the listed entity will be required for a RPT above INR 1 Crore, whether entered into individually or taken together with previous transactions during a financial year, to which the subsidiary of a listed entity is a party but the listed entity is not a party, if the value of such transaction, exceeds the lower of the following:

(1) 10% of the annual standalone turnover of the subsidiary as per the last audited financial statements of the subsidiary; or

(2) the threshold for material RPTs of listed entity as specified in Schedule XII.

B. However, where such subsidiary does not have audited financial statements for a period of at least 1 year, prior approval of the audit committee of the listed entity will be required if the if the value of such transaction, exceeds the lower of the following:

(1) 10% of the aggregate value of the paid-up share capital and securities premium account of the subsidiary; or

(2) the threshold for material RPTs of listed entity as specified in Schedule XII.

The subsidiary's paid-up share capital and securities premium account is required to be calculated as of a date which is not older than three months prior to seeking approval of the audit committee.

(i) Two new provisos have been inserted under Regulation 23(4) clarifying that omnibus approval given by the shareholders of a listed entity for material RPTs shall be valid (a) in case of approvals granted at an Annual General Meeting (“AGM”), until the next AGM held within the timelines provided under the Companies Act, 2013 (“CA 2013”); and (b) in case of approvals granted at any Extraordinary General Meeting (“EGM”), for a period of not more than 1 year from the date of such approval.

(ii) It has further been clarified by way of an explanation that the reference to “holding company” in Regulation 23(5)(b) should be read as a reference to “listed holding company”.

Footnote

1. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2025

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