What is a related party transaction (RPT)?
What is a related party transaction? It is a deal between a listed company and a related party, such as a promoter, a director, a key management person, a subsidiary, or another entity in the same group. SEBI regulates related party transactions under Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, because a deal with an insider can move value out of the listed company and away from public shareholders.
Definition
A related party transaction (RPT)
is a transaction between a listed company and a related party, such as a promoter, director, key management person, or group entity. It is governed by Regulation 23 of the SEBI LODR Regulations, 2015, and material RPTs need shareholder approval. Source: SEBI LODR Regulations, 2015.
When does a related party transaction need approval?
Every RPT needs approval from the audit committee, which can also give omnibus approval for repetitive transactions. A material RPT needs an extra layer: prior approval by shareholders.
Scaled to turnover
Materiality for an RPT is set on a scale linked to annual consolidated turnover, capped at Rs 5,000 crore, replacing the earlier flat Rs 1,000 crore test
Source: SEBI (LODR) (Fifth Amendment) Regulations, 2025
From 1 April 2022 the test was a flat one: an RPT was material if it exceeded Rs 1,000 crore or 10% of the listed entity's consolidated annual turnover, whichever was lower. The SEBI LODR (Fifth Amendment) Regulations, 2025 replaced that with a scale linked to turnover.
| Annual consolidated turnover | Materiality threshold |
|---|---|
| Up to Rs 20,000 crore | 10% of annual consolidated turnover |
| Above Rs 20,000 up to Rs 40,000 crore | Rs 2,000 crore plus 5% of turnover above Rs 20,000 crore |
| Above Rs 40,000 crore | Rs 3,000 crore plus 2.5% of turnover above Rs 40,000 crore, or Rs 5,000 crore, whichever is lower |
SEBI's own worked example: an entity with consolidated turnover of Rs 30,000 crore has a threshold of Rs 2,500 crore, being 10% of the first Rs 20,000 crore plus 5% of the remaining Rs 10,000 crore. On the resolution to approve a material RPT, related parties must abstain from voting.
Who counts as a related party?
The definition is broad. It covers promoters and the promoter group, directors, key management personnel and their relatives, and entities that control, are controlled by, or are under common control with the listed company. This is why a promoter's private firm dealing with the listed company falls squarely inside the RPT rules. You can see the promoter side of the register in the shareholding pattern, and pledges by promoters in promoter pledging disclosures.
Where are RPTs disclosed, and why read them?
Listed entities report their related party transactions to the stock exchanges every six months, in a prescribed format. Since the quarter ending 31 December 2024 that disclosure is filed as part of Integrated Filing (Financial) rather than as a standalone submission. See how to check related party transactions. That gives you a dated public record of who transacted with the company and for how much. Reading RPT disclosures is one way to check whether value is flowing to insiders on arm's-length terms. Flock reads these public disclosures and keeps each one dated and source-linked. What any single RPT means is your call to make.
Frequently asked questions
What is a related party transaction?
A related party transaction is a deal between a listed company and a related party, such as a promoter, director, key management person, subsidiary, or group entity. SEBI regulates these under Regulation 23 of the LODR Regulations, 2015, to guard against value leaking to insiders. Source: SEBI LODR Regulations, 2015.
When does an RPT need shareholder approval?
A material RPT needs prior shareholder approval. The SEBI LODR (Fifth Amendment) Regulations, 2025 replaced the earlier flat threshold with a scale linked to annual consolidated turnover: 10% of turnover up to Rs 20,000 crore, Rs 2,000 crore plus 5% of turnover above Rs 20,000 crore up to Rs 40,000 crore, and Rs 3,000 crore plus 2.5% of turnover above Rs 40,000 crore or Rs 5,000 crore, whichever is lower. Related parties cannot vote on that resolution. Source: SEBI LODR Regulations, 2015, as amended.
Who approves related party transactions?
The audit committee must approve related party transactions, including on an omnibus basis for repetitive deals. Material RPTs additionally require approval by shareholders through a resolution on which related parties abstain from voting. Source: SEBI LODR Regulations, 2015.
Where are related party transactions disclosed?
Listed entities disclose related party transactions to the stock exchanges on a half-yearly basis, in a prescribed format, along with their financial results. This creates a dated public record of RPTs. Source: SEBI LODR Regulations, 2015.
Flock tracks these filings, sourced, dated, and linked back to the original. See what smart-money entities disclosed, without the guesswork about what it means.
Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.