Implementing New SEBI Guidelines on Corporate Governance

In the present growing corporate world, corporate governance principles are not just regulatory tick boxes but critical codes of trust, resilience, and sustainable growth. The Securities and Exchange Board of India (SEBI) introduced several updates to its Listing Obligations & Disclosure Requirements (LODR), which show its intent to continue enhancing the business governance model in India.

Unlike when you read about dull regulatory provisions, implementation is about real change: protecting stakeholder interests, improving clarity within the boardroom, and strengthening the twin engines of transparency and accountability.

Latest Governance Milestones in 2025

Enhanced norms for High Value Debt Listed Entities (HVDLEs)

An important amendment made at the start of the year increases the threshold of entities with listed non-convertible debt securities (NCDs) to be classified as HVDLEs from ₹5,000 million to ₹10,000 million and puts them under the complete governance mandate of LODR, including the expectations of corporate governance reports.

Smarter, turnover-linked thresholds for Related Party Transactions (RPTs)

SEBI has proposed to introduce turnover-based thresholds that align RPT norms to a company’s size. For example, shareholders’ approval may be triggered only where transactions exceed ₹50 billion, and companies can sell the smaller portion of the deal (under ₹150 million) with no disclosure. This is a step in the right direction to reduce compliance burden without distracting from the integrity of reporting.

Embedding Corporate Governance Principles Through an Evolving Model

Harmonising with Companies Act and LODR

India’s assigned system of governance has much of its history tied to the Companies Act, 2013, and danced with Clause 49, which became LODR in 2014, Comptroller and Auditor General of India. The convergence of those statutes and current evolving LODR attributes into where we are at the moment articulates our business governance model – a structured but flexible governance framework.

Deeper boardroom accountability

The 2025 SEBI amendments show proof of a robust board structure with both audit committees for ensuring oversight and a much-needed tilt towards strategic governance instead of simply compliance and reporting. The independent directors are placed to deliver on this ethos, bringing fairness and objectivity.

Corporate Governance Audit

A useful corporate governance audit is not just a formality but rather an examination, which means checking that all systems and practices, governance and otherwise, have a purpose. The governance reporting and assessments are now more apparent, especially for companies deemed to be in the HVDLE category. Companies need audits well ahead of governance reporting and assessments.

Similarly, the RPT regulations call for governance audits that evaluate well beyond compliance, but look at whether the materiality thresholds – and logic – are really relevant to the size and culture of the company.

Responsibilities of the Audit Committee

The audit committee’s role has never been more central than it is now, as under Section 177 of the Companies Act and Regulation 18/Schedule II of LODR, there are responsibilities that include:

• Ensuring that the membership of committees are comprised appropriately in regard to independence.
• Reviewing quarterly and annual financial statements, as well as internal audits and statutory audits, significant weaknesses in internal controls, RPT disclosures, and deviations from the accounting policy.
• Reviewing risk management policies as opposed to having processes in place while regard to the effectiveness of the internal control system, which includes the whistle-blower system, appropriate internal audits, etc.

In today’s environment, the audit committee must also consider how to interpret new thresholds of RPTs and whether the materiality it considers aligns with the reality rather than simply noting numbers on a page.

Smart Strategies for Implementation

The following strategies can be adopted for an effective implementation of SEBI Guidelines:

• Complete a governance health audit

To start, map current practices against the updated norms—especially for HVDLEs—and note areas of deficiency in RPT management, audit frequency and report actual results.

• Enhance the audit committee effectiveness

Confirm audit committees meet often, have access to appropriate data, and have the ability to take action with both financial scrutiny and acknowledgement of new norms.

• Evaluate the business governance model as a living framework

This is not a “set it and forget it” regime. Review policies governing the disclosure of material RPT (e.g., thresholds and triggers) and the structure of the internal audit function to ensure they progress along with the business.

• Train and communicate

Educate boards and committees on new thresholds, disclosure requirements, and governance expectations. Engaged leadership helps make governance more than a set of rules, as it is a culture.

Conclusion

Efficient governance should not be overly quantitative. It must involve some form of qualitative adjustment. This can be achieved by allowing regulations to become relevant to a company’s purpose by humanising the regulation, through audits, and by allowing audit and risk committees to go beyond compliance. “Governance commitment” commensurate with the company’s scale and complexity, as this is the way forward with SEBI’s new guidelines.

It is an invitation, but it is beyond an invitation. It is an invitation to think of governance as a story. A story of transparency, of trust, of teams that care not just for compliance but for corporate dignity.