SEBI Launches RPT Portal to Enhance Transparency in Related-Party Transactions

SEBI Tightens Related Party Transaction Norms to Sharpen Governance and Restore Investor Trust

Mumbai | February 14, 2025 In a decisive move aimed at raising the bar for corporate governance, SEBI Chairperson Madhabi Puri Buch unveiled a strengthened framework for related-party transactions (RPTs)—a recurring flashpoint in promoter-led businesses. The reforms are designed to bring sharper scrutiny, enhanced disclosures, and more balanced decision-making, especially where the interests of minority shareholders and controlling promoters diverge.

A New Baseline for RPT Disclosures

At the centre of the overhaul is a uniform set of minimum disclosure standards, developed by SEBI’s Industry Standards Forum (ISF). These norms must now be followed by all listed companies before seeking Audit Committee or shareholder approval for material RPTs.

Key Features of the Framework:

• Advance, Detailed Disclosures: No related-party deal can be approved unless a company first discloses detailed information to its Audit Committee, ensuring adequate review ahead of the vote.
• Promoter-Minority Alignment: The framework is tailored to reduce friction between controlling shareholders and public investors—where most governance issues around RPTs tend to surface.
• Governance-First Mindset: SEBI’s intention is to shift corporate culture from a compliance checkbox to meaningful, preemptive governance around conflict-prone transactions.

Governance as a Foundation of Trust

In her remarks, Chairperson Buch reminded market participants that governance remains the single most durable pillar of market credibility.

“Governance is what drives trust in companies... We emphasize RPTs because they are where potential conflicts may arise.”

RPTs, she noted, may often appear operationally necessary—especially in tightly knit business groups—but without sunlight and scrutiny, they can quickly undermine investor confidence.

RPT Tracking Portal: Transparency at Scale

Perhaps the most tangible reform unveiled was the launch of SEBI’s dedicated RPT portal, which consolidates and standardizes RPT data across listed companies. This platform serves as both a watchdog and an enabler—bringing consistency, comparability, and public access to a previously opaque domain.

The Portal’s Core Functions:

• Transparency Engine: All RPT filings are now centrally available in a structured format, making cross-company analysis easier than ever before.
• Investor Empowerment: Public and institutional investors gain direct, real-time access to transaction-level disclosures—helping them vote more confidently and challenge questionable deals.
• Regulatory Oversight: The portal also bolsters SEBI’s surveillance and enforcement capabilities by creating a unified audit trail of all RPTs across the market.

Global Capital Takes Note

SEBI officials confirmed that interest from foreign portfolio investors (FPIs) and global funds has grown steadily around its RPT reforms.

These investors, many of whom are subject to ESG-linked mandates, are increasingly focused on governance lapses and disclosure quality. The regulator has fielded frequent queries about how India is improving transparency and accountability in this domain.

“Foreign and domestic institutions alike are asking deeper questions about how RPTs are being managed. These reforms are a response to that demand,” said a senior SEBI official.

Implications for Corporates and Boards

For India Inc., the implications are clear: governance expectations have shifted.

• Boards and Audit Committees will need to exercise tighter oversight and diligence on RPT proposals, especially those involving group entities.
• Internal Controls must be upgraded to ensure complete and timely disclosures that meet the new standards.
• Shareholders, particularly minorities, will have more tools to hold management accountable.

The regulatory shift also places reputational risk squarely in focus. In an era of increased transparency, even technically compliant—but poorly explained—RPTs could face public scrutiny and institutional resistance.

Conclusion

SEBI’s latest RPT reforms mark a major stride in restoring market discipline around one of corporate India’s most sensitive governance issues.

By mandating stronger disclosures and building an infrastructure for real-time oversight, the regulator is aiming not just to detect wrongdoing—but to prevent it. The message is clear: related-party transactions must not only be justified—they must appear justifiable.

As India’s capital markets seek deeper integration with global investors, the credibility of governance norms will be as important as the strength of economic fundamentals. SEBI’s February reforms are a signal that both are being taken seriously.