SEBI has mandated stricter disclosure norms and enhanced shareholder approval for for listed companies. This move aims to bolster and protect minority investors from potential exploitation.
75%
Minority Shareholder Approval for Material RPTs
The Securities and Exchange Board of India (SEBI) today announced significant amendments to its Listing Obligations and Disclosure Requirements (LODR) regulations, specifically targeting related-party transactions (RPTs). Under the new rules, listed companies will now require **prior approval from 75% of minority shareholders** for any material RPT exceeding a certain threshold, ensuring greater oversight. The scope of entities considered 'related parties' has also been broadened, and audit committees will have enhanced powers to review and reject such transactions. This regulatory tightening is a crucial step towards strengthening corporate governance and safeguarding the interests of minority shareholders.
💭 If you're wondering…
It's an RPT that is significant enough (based on value or percentage of company turnover) to potentially impact the company's financials or the interests of its shareholders, thus requiring special scrutiny.
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