Company boards to decide on royalty payments of up to 5% of turnover: Sebi

28 Jun 2019

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The board of the Securities and exchange Board of India (Sebi) at its meeting on Thursday decided that payments made to related parties towards brand usage or royalty may be considered material only if the transaction(s) exceed 5 per cent of the annual consolidated turnover of the listed entity during a financial year.

This would, however, require approval of the shareholders, with no related party having a vote to approve such resolutions, Sebi said.
Sebi board had earlier decided to defer for three months implementation of the Sebi (Listing Obligations and Disclosure Requirements) Regulations, which prescribes that payments made to related parties towards brand usage or royalty are to be considered material if the transaction(s) exceed 2 per cent of the annual consolidated turnover of the listed entity during a financial year. 
This provision was to come into effect from 1 April 2019. Sebi said it has since received representations on the subject and with a view to analyse them, the board had decided to defer the implementation of this provision for three months, ie, till 30 June 2019.

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