CAIRR Update November 11, 2021

a. Any person or entity belonging to the promoter or promoter group (irrespective of its/their shareholding) in the listed entity;

b. Any person or entity holding 20% or more of the equity shareholding, whether directly or indirectly, in the listed entity

c. Any person or entity holding 10% or more of the equity shareholding, whether directly or indirectly, in the listed entity (w.e.f. April 1, 2023)

2. Broadened scope of Related Party Transactions (RPTs): Earlier, a transaction involving a transfer of resources, services or obligations between a listed entity and its related party. Now, transactions between :

are also brought under the ambit of RPTs. However, few of the corporate actions such as payment of dividend, preferential, bonus or right issue of    securities, buy-back of securities  and acceptance of deposits by NBFCs/banks at par with unrelated parties are excluded from the definition.

3. Threshold of material RPT: RPT shall be considered material, if the transaction(s) to be entered into individually or taken together with previous transactions during a FY, exceeds Rs. 1,000 Crore or 10% of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity, whichever is lower.

4. Enhanced role of Audit Committee(AC) in approving RPTs:

a.   AC to define “material modifications” and disclose it as part of the policy on materiality of related party transactions and such material modifications shall require prior approval of AC.

b.    RPTs where the subsidiary is a party but the listed entity is not a party requires prior approval of AC, whether entered into individually or taken together with previous transactions during a financial year exceeds ten per cent of the annual consolidated turnover, as per the last audited financial statements of the listed entity; With effect from April 1, 2023,  RPTs exceeding such limits applied on the annual standalone turnover as per the last audited financial statements of the subsidiary shall require AC’s prior approval.

c.   AC’s approval is not required where RPT is entered into between two wholly-owned subsidiaries of the listed holding company, whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval

5. Stricter RPT Disclosure Timelines for listed entities:

a.   With effect from April 1, 2022, within 15 days (as against existing timeline of 30 days) from the date of publication of standalone/ consolidated financial results for the half year.

b.       With effect from April 1, 2023, on the same date of publication of the financials.