The Securities Exchange Board of India (“SEBI”) on November 9, 2021 issued amendment to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”). This amendment is meant to implement the decision taken at a meeting of SEBI on September 28, 2021 to amend regulatory provisions on related party transactions.
The November 9, 2021 amendment to the LODR Regulations (“LODR Amendment”) has, inter alia, made the following modifications:
Unless otherwise specified in the respective provision, the LODR Amendment shall come into force with effect from April 1, 2022.
Argus Observation: In the LODR Regulations, the definition of ‘related party’ was restricted to include those persons or entities defined under Section 2(76) of the Companies Act, 2013 or under applicable accounting standards. Vide the LODR Amendment, the definition of ‘related party’ has, inter alia, been modified to also include any person or entity forming a part of the promoter of a listed entity, or a person or entity holding equity shares in a listed entity. Further, the definition of ‘related party transaction’ of the LODR Regulations was restricted to only a transfer of resources, services or obligations between a listed entity and a related party. In the LODR Amendment, the definition of ‘related party transaction’ has, inter alia, been modified to also include a transaction involving transfer of resources, services or obligations between a listed entity and any other person or entity, acting for the benefit of a related party.
Please find a copy of the LODR Amendment here.
This update has been contributed by Nidhi Arya (Partner) and Avin Sarkar (Associate).
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