DGFT issues Trade Notice seeking inputs on draft Management System Requirements for Internal Compliance Programme for export of dual-use (SCOMET) items
To enhance transparency and fairness in the approval process of Related Party Transactions (RPTs) for listed entities, SEBI issued a circular on February 14, 2025, outlining the industrial standard on minimum information required for the Audit Committee and shareholder’s review. Initially scheduled to take effect on April 1, 2025, SEBI has now extended the deadline to July 1, 2025, following feedback from stakeholders requesting additional time. This extension was communicated in SEBI’s circular dated March 21, 2025.
The industrial standard was formulated by the Industry Standards Forum (ISF) comprising of representatives from three industry associations, viz. ASSOCHAM, CII and FICCI, under the aegis of the Stock Exchanges, in consultation with SEBI. The objective was to facilitate uniform approach and to assist listed entities in complying with the disclosure in relation to RPTs.
Under these standards, while submitting an RPT proposal for review and approval, listed entities are required to provide the Audit Committee and shareholders with specific information. The same includes details related to the nature of the transactions, financial data, relationships and justifications, using prescribed formats to ensure informed decision-making.
ELP Comments
The original deadline of April 1, 2025, was deemed too soon for proper implementation. With the circular issued in mid-February 2025, listed entities were given limited time to compile information related to the last three financial years. Additionally, the ISF is still in the process of simplifying industry standards based on feedback received from various stakeholders. The extension of the deadline granted by SEBI is considered a positive and welcome development.
The SEBI Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/18 dated February 14, 2025 on Industry Standards can be found here.
The SEBI Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/37 dated March 21, 2025 can be found here.
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