Related-party transactions have always occupied an odd space in Indian corporate law simultaneously one of the most heavily documented areas of compliance and one of the most quietly abused, depending on which side of the boardroom table you’re sitting on. Every company with a promoter family, a group structure, or a set of interlocking directorships has related-party transactions. The question has never been whether they exist; it’s whether they’re priced fairly, disclosed properly, and approved by people who aren’t simply rubber-stamping a deal that benefits themselves or their relatives.
Two separate regulatory tracks are reshaping this space right now one from the Ministry of Corporate Affairs through the Corporate Laws (Amendment) Bill, 2026, and one from SEBI through a parallel consultation on the listing regulations. They’re moving in almost opposite directions, and understanding both is the only way to actually make sense of where RPT compliance is headed.
The starting point: how RPTs are regulated today
Section 188 of the Companies Act, 2013 is the backbone provision. It requires board approval — and, above prescribed thresholds, shareholder approval by ordinary or special resolution — for a defined list of transactions between a company and its related parties: sale or purchase of goods, leasing property, appointing agents, related-party employment, and so on. Section 2(76) defines who counts as a “related party” in the first place, covering directors, key managerial personnel, their relatives, and various entities with directorial or ownership overlap. Section 189 additionally requires companies to maintain a register of contracts and arrangements involving related parties, which shareholders can inspect at the AGM.
For listed companies, SEBI’s Listing Obligations and Disclosure Requirements Regulations, 2015 layer an additional set of obligations on top of the Companies Act framework: Regulation 23 requires a board-approved RPT policy, defines materiality thresholds, and currently sets the shareholder-approval trigger at transactions crossing roughly ₹1,000 crore or 10% of consolidated annual turnover, whichever is lower. Regulation 23(9) requires half-yearly disclosure to stock exchanges. It’s a genuinely multi-layered regime, and one of the recurring complaints from corporate India has been that the Companies Act and SEBI LODR thresholds don’t always talk to each other cleanly.
Track one: SEBI wants to loosen the dial
In August 2025, SEBI put out a consultation paper proposing to relax the RPT thresholds under LODR quite significantly. Instead of the current flat ₹1,000 crore ceiling for triggering mandatory shareholder approval, SEBI proposed moving to a slab system tied to a company’s annual turnover — which, for very large companies, could push the shareholder-approval trigger up to roughly ₹5,000 crore. The paper also floated scrapping the disclosure requirement altogether for RPTs valued below ₹15 crore.
The logic SEBI has offered is that the current flat threshold doesn’t scale with company size — a ₹1,000 crore transaction is material for a mid-cap company but comparatively routine for one of India’s largest conglomerates, and forcing every large company to run every such transaction through a shareholder vote adds friction without necessarily adding governance value. Critics of the proposal, unsurprisingly, worry that raising the bar this much simply lets larger promoter-controlled groups move bigger related-party deals through the board without ever putting them to a shareholder vote — precisely the kind of transaction where minority shareholder scrutiny matters most.
Track two: the Companies Act is tightening personal accountability
While SEBI has been talking about relaxing disclosure thresholds, the Corporate Laws (Amendment) Bill, 2026 — introduced in the Lok Sabha on March 23, 2026, and currently before a Joint Parliamentary Committee — is moving in the opposite direction on a different lever entirely: personal liability for directors who approve non-compliant RPTs.
Here’s the specific mechanism. Section 188 defaults were decriminalised back in 2020, converting most violations from a prosecutable offence into a civil monetary penalty — currently ₹25 lakh for listed companies and ₹5 lakh for others. That decriminalisation was, at the time, treated as a business-friendly reform. But it left an odd gap: Section 164(1)(g), the provision that disqualifies a person from serving as a director, was only ever triggered by a conviction under Section 188. Since 2020, there generally isn’t a conviction to speak of — there’s a penalty instead — so directors who got fined for RPT non-compliance could, in practice, simply pay up and carry on serving.
The 2026 Bill closes that gap. It broadens Section 164(1)(g) so that a penalty under Section 188, not just a conviction, now triggers director disqualification. In effect, this restores the personal consequence that decriminalisation had quietly stripped away, but does it through the disqualification mechanism rather than the criminal law. A director who approves a related-party transaction that later turns out to breach Section 188 — even one who was acting largely on management’s assurances — now risks losing their eligibility to serve as a director at all, not merely paying a fine on the company’s behalf.
This is a genuinely significant shift in how personal risk is allocated. Historically, RPT penalties under the decriminalised regime landed mostly on the company. Post-amendment, the people who sat in the boardroom and voted yes carry direct, personal exposure that follows them into every other directorship they hold, since DIN records and disqualification apply across all companies a person is associated with, not just the one where the breach occurred.
Reading the two tracks together
Put SEBI’s proposal and the MCA Bill side by side and you get a fairly clear (if slightly uncomfortable) picture: disclosure and shareholder-approval thresholds may be loosening at the transaction level, even as personal accountability for the directors approving those transactions is tightening substantially. Fewer RPTs may need to go to a shareholder vote or get disclosed in granular detail — but the directors signing off on the board resolution are taking on meaningfully more personal risk than before, because a penalty rather than a conviction is now enough to end their tenure.
For company secretaries and boards, the practical implication is that the old habit of treating RPT approval as a routine board-agenda item — read the note, check the valuation certificate, vote yes — needs to become a genuinely more careful exercise. Documentation of the arm’s-length basis for a transaction, the valuation methodology used, and the specific questions directors raised before approving matters more now than it did when the worst-case outcome was a fine paid by the company treasury. The stakes for an individual director who signs off on a related-party deal that later unravels have simply gone up, even if the paperwork burden on the transaction itself may be going down.
Both the SEBI consultation and the MCA Bill are still works in progress — the former awaiting a final notification after the consultation period, the latter sitting with the Joint Parliamentary Committee ahead of an expected report around the Monsoon Session. Anyone advising boards on RPT policy right now should treat this as a moving target, but the direction on personal director liability, at least, looks reasonably settled.
