Regulation 23 of SEBI LODR, 2015 has been amended by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2019 published on 27th June, 2019.
Regulation 23 deals with Related party transactions. All Listed entities are required to formulate a policy on Materiality of Related Party Transaction and on dealing with related party transactions. Sub-regulation (1A) dealing with materiality of payments made towards brand usage or royalty to related parties, was inserted on 09th May, 2018. This amendment will come into effect on 1st July, 2019.
As per the Sub-regulation 1A, “A transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceed two percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.”
By this amendment, the limit of “two percent” of the annual consolidated turnover of the listed entity has been increased to “Five percent”.
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