SEBI at its Board meeting held on 27 March 2019, decided to extended the timeline for implementation of Regulation 23(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [‘SEBI LODR’] relating to payment of royalty and brand usage charges to related parties.
In the amendments introduced to SEBI LODR on 09th May 2018, any payments made towards brand usage or royalty to related parties were considered material if the transaction(s) exceed 2% of the annual consolidated turnover of the listed entity during a financial year. Accordingly, it requires an approval of the shareholders, with no related party having a vote to approve such resolutions.
This provision was to come into effect from April 1, 2019 as per the amended SEBI LODR. In view of the representations received on the subject and with a view to analysing them, the Regulator has decided to defer the implementation of this provision for three months i.e. till June 30, 2019.
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