When a listed entity sends a related-party transaction proposal to its audit committee, the approval paper cannot be treated as a one-line note containing only the counterparty and amount. SEBI has standardised the minimum information that should support the decision. The practical complication is that the information package is not identical for every transaction: the October 2025 relaxation creates a lighter Annexure-13A route for smaller RPTs, while transactions above that band continue to follow the fuller RPT Industry Standards.
The regulatory starting point is SEBI's consolidated LODR Regulations page, last amended on 14 July 2026, together with the June 2025 RPT Industry Standards circular and SEBI's 13 October 2025 circular on minimum information for RPT approvals. The direct October 2025 circular PDF contains Annexure-13A and is useful when preparing the actual approval pack.
The first question is which information tier applies
The October 2025 circular works by aggregating transactions with the same related party during the financial year, including transactions approved by way of ratification. For this purpose, compare that aggregate with 1% of the listed entity's annual consolidated turnover based on the last audited financial statements and with ₹10 crore, and use the lower figure.
- Up to ₹1 crore: the specific minimum-information requirements referred to in the October 2025 relaxation do not apply.
- Above ₹1 crore but not exceeding the lower of 1% of annual consolidated turnover or ₹10 crore: provide the reduced minimum information specified in Annexure-13A.
- Above that 1%/₹10 crore band: the fuller RPT Industry Standards apply, subject to the governing SEBI framework and any transaction-specific requirements.
This is an information-package test, not a blanket exemption from Regulation 23 approval. Regulation 23(2) continues to provide, as its starting rule, that related-party transactions and subsequent material modifications require prior approval of the listed entity's audit committee, subject to the provisos and exemptions in the regulation. The ₹1 crore figure in the October circular should therefore not be read as meaning that every RPT below ₹1 crore can bypass the audit committee.
A quick turnover example
Assume, only for illustration, that the listed entity's last audited annual consolidated turnover is ₹800 crore. One per cent is ₹8 crore, which is lower than ₹10 crore. For the information standard, transactions with a particular related party up to ₹1 crore fall within the stated minimum-information relief; an aggregate above ₹1 crore and up to ₹8 crore uses Annexure-13A; an aggregate above ₹8 crore moves outside that lighter band and should be tested against the fuller RPT Industry Standards.
If annual consolidated turnover is ₹2,000 crore, 1% is ₹20 crore, so ₹10 crore becomes the lower figure. In that case, the Annexure-13A band is above ₹1 crore and up to ₹10 crore. The exercise should be repeated for each related party using the correct audited turnover base and financial-year aggregation.
What Annexure-13A expects the audit committee to see
Annexure-13A is short enough to be practical, but it still requires the paper to explain the transaction rather than merely identify it. The audit committee information includes the type and material terms of the proposed RPT, the related party's name and relationship with the listed entity or its subsidiary, the tenure, the proposed value and the proportion that the transaction represents of the listed entity's annual consolidated turnover. Where a subsidiary is involved, the relevant percentage of the subsidiary's standalone annual turnover is additionally called for.
The paper should also explain why the RPT is in the interest of the listed entity. If management has relied on a valuation or another external-party report, that report should accompany the proposal. The circular also allows the percentage of the counterparty's annual consolidated turnover represented by the proposed RPT to be provided voluntarily.
Loans, deposits, advances and investments need a deeper trail
Where the proposed RPT involves a loan, inter-corporate deposit, advance or investment made or given by the listed entity or its subsidiary, Annexure-13A asks for more than the headline amount. The information includes the source of funds, relevant indebtedness used to fund the transaction, applicable terms such as covenants, tenure, interest rate and repayment schedule, the security position where relevant, and the purpose for which the ultimate beneficiary will use the funds. The circular contains a stated carve-out from certain source-of-funds and indebtedness disclosures for listed banks, NBFCs, insurance companies and housing finance companies.
For finance teams, this means an approval note should be assembled from the commercial file and treasury evidence before the committee meeting. A proposal that says only “inter-corporate loan of ₹5 crore on arm's-length terms” can still be missing information that SEBI expects the committee to receive.
What changes when shareholder approval is required
Regulation 23(4) requires prior shareholder approval for material RPTs and subsequent material modifications, subject to the regulation's exceptions. The current consolidated text also says no related party may vote to approve such a resolution, whether or not that party is related to the particular transaction. The relevant current text is available in SEBI's consolidated LODR Regulations PDF.
When an RPT is being placed before shareholders for approval, the October circular requires the explanatory statement to carry prescribed information. Under Annexure-13A, that includes a summary of the information given by management to the audit committee, the justification for why the transaction is in the listed entity's interest, the specified information for loans, deposits, advances or investments where relevant, and a statement that any valuation or external report relied upon will be made available through the shareholders' registered email addresses. Other relevant information should also be included where it matters to the decision.
The shareholder notice should therefore be prepared from the same controlled information set used for the audit committee, not recreated later from memory. Differences between the committee paper, valuation support and explanatory statement can create avoidable governance questions.
Do not confuse three different thresholds
Listed-company RPT work can contain several rupee and turnover tests, and they answer different questions. The October circular's ₹1 crore and lower-of-1%-or-₹10-crore figures determine the level of minimum information under that circular. Regulation 23 and Schedule XII separately determine materiality and approval consequences. Subsidiary RPTs can have their own audit-committee triggers. A single spreadsheet column labelled “RPT threshold” is therefore unsafe because it can mix distinct legal tests.
A workable control is to maintain separate fields for: the related-party aggregate for the financial year; the information-tier threshold; the Regulation 23 audit-committee requirement; the Schedule XII materiality threshold; any subsidiary-specific trigger; and whether shareholder approval is required. That makes the approval route traceable even when the same transaction touches more than one test.
A practical way to build the approval file
- Fix the party and aggregation. Confirm the related party and total relevant transactions with that party during the financial year, including any ratified transactions.
- Calculate the information tier. Compute 1% of the last audited annual consolidated turnover, compare it with ₹10 crore, and separately note the ₹1 crore relief threshold.
- Prepare the correct information pack. Use Annexure-13A only where the transaction sits in its band; otherwise apply the fuller RPT Industry Standards as required.
- Run the approval analysis separately. Do not use the information-tier result as a substitute for Regulation 23 audit-committee, materiality, subsidiary or shareholder tests.
- Attach evidence, not conclusions. Include material terms, commercial rationale, pricing support, valuation or external reports where relied upon, funding details for financing-type transactions and the calculations behind the turnover percentages.
- Reconcile the shareholder notice. Where shareholder approval is needed, make sure the explanatory statement agrees with the committee material and contains the required shareholder information.
The Companies Act analysis also remains separate. For the Section 188 approval, ordinary-course and arm's-length framework, see CA Samaaj's Section 188 related-party transaction guide. A listed entity should not assume that satisfying one regime automatically satisfies the other.
The useful discipline is to separate approval from information. First decide which approvals Regulation 23 and other applicable law require. Then decide how much information SEBI requires the decision-makers to receive for that transaction size. That prevents two common errors at once: treating the ₹1 crore information relief as an approval exemption, and sending an approval proposal that technically reaches the right committee but does not contain enough information for an informed decision.
