To curb insider trading, SEBI’s Primary Market Advisory Committee (PMAC) has suggested that all material related party transactions (RPTs) should be immediately disclosed.
The committee has also sought the Company’s Board intervention in laying down a policy to identify what constitutes material RPT.
Sources said that the panel has decided to widen the definition of a related party according to the Indian Accounting Standard 24.
The IAS-24 defines various classes of entities and people as related parties and sets out the disclosures required in respect of those parties, including the compensation of key management personnel.
The 'related party transactions' are those that a company enters into with its senior management personnel, promoters and associate entities, among others.
Transactions involving associates, joint ventures, members of group companies, joint ventures and associates through a third entity, including post-employment benefit plan for employees of either the company or related party also fall under the ambit of a related party transactions.
These transactions also have to be approved by (non-promoters) shareholders, who are not related to the transactions.