Jun 28, 2019

Revision in threshold limit for RPTs w.r.t., Payment of Royalty/ Brand usage

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SEBI vide its notification dated June 27, 2019 published in the Gazette of India, brought an amendment in SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2019.

In the said notification, SEBI based on the representations received from the industry, amended Regulation 23(1A) w.r.t., Related Party Transaction (RPT) pertaining to payment for royalty/ brand usage.

The gist of amendment is as follows:

RPT w.r.t., payment for royalty/ brand usage: Reg 23(1A) Considered material if:>
Transaction entered with related party for brand usage or royalty whether singly/ taken together with previous transaction during a FY Prior to Amended Newly Amended
Transaction > 2% of annual consolidated turnover of listed entity. Transaction > 5% of annual consolidated turnover of listed entity.

  • The Regulation 23(1A) shall be applicable to all the listed entities w.e.f., July 01, 2019.
  • Listed entities shall note that all existing material related party contracts or arrangements w.r.t., payment of royalty/ brand usage, entered into prior to the date of notification and which may continue beyond such date shall be placed for approval of the shareholders’ in the first General Meeting subsequent to notification of said regulation.
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