The regulator said in a circular that listed companies have to provide justification on why the proposed transaction is in their interest.
If the transaction relates to any loans, inter-corporate deposits, advances or investments made by the listed entity or its subsidiary, details of the source of funds in connection with the proposed transaction should be disclosed, it said.
Besides, companies should also disclose all the terms including covenants, interest rate and repayment schedule and the purpose for which the funds would be utilised by the ultimate beneficiary.
Sebi said companies must provide more details to audit committee to enable them to scrutinise the proposed related-party transaction. The companies have to give material terms of the proposed transaction, name of the related party and its relationship with the listed company or its subsidiary.
While for a transaction involving a subsidiary, the percentage calculated on the basis of the subsidiary’s annual turnover on a standalone basis should be provided, the regulator said.
