SEBI Royalty Disclosure Rules for Related-Party Payments
Why in the news
Concern over heavy outflows and murky contracts led SEBI to strengthen related-party royalty reporting, helping audit committees and shareholders oversee better.
New requirements
| Rule | Content |
|---|---|
| Disaggregation | Break composite agreements into brand, patents, technology, know-how; explain if impossible |
| Peer comparison | Material payments comparable across firms |
| Sunset clause | State payment duration |
| Fee separation | Professional, management and technical fees shown apart from royalty |
Parent-subsidiary angle
- Non-uniform royalty from foreign subsidiaries: disclose minimum and maximum rates.
- Some experts call this burdensome.
Exam angle
- Regulator: SEBI; subject: related-party royalty.