Sebi’s Primary Market Advisory Committee (PMAC) met again on March 23 to discuss the requests of the industry associations, which had made representations on March 16 to the expert panel headed by Mohandas Pai, chairman, Manipal Global Education Services.
The regulator had asked the PMAC to examine the issues faced by companies in implementing the new rules.
“PMAC has concluded that the problems cited by them are not supported by facts,” a person who attended the meeting spoke to ET on condition of anonymity.
At present, Sebi rules define a related party transaction as any transfer of resources, services or obligations between a listed entity and a related party regardless of whether a price is charged or not.
The amended regulations have widened the ambit of Related Party Transactions (RPT). Sebi had proposed several key changes to rules governing RPT including materiality thresholds for seeking shareholder’s approval, requirement to take approval for transactions between two foreign subsidiaries of the listed Indian holding company and change in the definition of related party owing to ownership among others.
“The new compliance requirements cast onerous obligations on companies. The industry has highlighted its concerns duly supported with rationale, case studies and data,” Sanjiv Mehta, president, FICCI and chairman, Hindustan Unilever, told ET.
“Since the new provisions will have a far-reaching impact on business activities in the normal course of business, and because of the complexities involved; FICCI has requested for deferment of the new provisions for a period of six months i.e. up till 1st October 2022 for undertaking a comprehensive re-assessment of the scope of coverage and its implications, in consultation with the industry.” The regulator as part of the rules had proposed that companies would have to seek prior approval of shareholders for any transaction exceeding Rs 1,000 crore or 10% of the consolidated annual turnover of the listed entity, whichever is lower.
