SEBI releases Working Group on RTP
Published: Jan 28, 2020
By TIOLCORPLAWS News Service
NEW DELHI, JAN 28, 2020: SEBI constituted a Working Group in November 2019 to review the policy space pertaining to related party transactions under the Chairmanship of Mr. Ramesh Srinivasan. The Working group has submitted its report on January 22, 2020. The terms of reference of the Working Group were to make recommendations to SEBI on the following issues:
1. Review the policy space relating to related party transactions, including the following:
(a) Definition of "related party" and "related party transactions";
(b) Thresholds for classification of "related party transactions" as material; and
(c) Process followed by Audit Committee for approval of related party transactions.
2. Review the provisions relating to related party transactions in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 vis-à-vis the Indian Accounting Standards and the Companies Act, 2013.
3. Specify a format for periodic disclosure of related party transactions by listed entities.
4. Recommendations for strengthening the monitoring and enforcement of regulatory norms related to related party transactions.
5. Any other matter, as the Working Group deems fit pertaining to related party transactions.
The Working Group deliberated on the threshold for determining shareholding above which a person not forming part of the promoter/promoter group would get classified as a related party and determined that a 20% threshold would be appropriate. The Working Group further determined that a deeming provision may be created for aggregation of direct and indirect shareholding of individual shareholders and their relatives as defined under the Companies Act, for the purposes of calculating the 20% threshold.
The report of the Working Group can be access here