Mar 31, 2022

Disclosure Obligations of High Value Debt Listed Entities in Relation to Related Party Transactions

By way of Circular dated January 7, 2022 (‘January 7 Circular’), SEBI has prescribed that the compliance requirements of SEBI Circular dated November 22, 2021 (‘November 22 Circular’) will also be applicable to high value debt listed entities (i.e., entities which have listed non-convertible debt securities with an outstanding value of ₹ 5,000 million (approx. US$ 65.30 million) and above), in addition to the entities that have listed specified securities on a recognized stock exchange. The November 22 Circular inter alia provides that such entities: (i) will be required to provide the specified information as per November 22 Circular, for review of the audit committee for approval of a proposed related party transaction (‘RPT’), and the audit committee will also review the status of long-term (more than one year) or recurring RPT on an annual basis; (ii) the notice being sent to the shareholders seeking approval for any proposed RPT will, in addition to the requirements under the Companies Act, 2013, include information prescribed under the November 22 Circular as part of the explanatory statement; and (iii) will be required to make RPT disclosures every six months in the format provided under the November 22 Circular. One such item required to be provided is a justification as to why the RPT is in the listed entity’s interest.




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