Reg 15(2) exemption from Reg 17 to Reg 27
Which small and SME-listed entities are outside the corporate governance provisions, and the related party transaction rule that now reaches them anyway.
Standing duty, no filing date
- SEBI
- SEBI events and governance
- Not specified
- 2026-09-01
The corporate governance provisions in Reg 17 to Reg 27 do not apply to an entity with paid-up equity share capital of ₹10 crore or less and net worth of ₹25 crore or less, or to an entity listed on the SME Exchange. One provision now cuts through: from 1 April 2025 Reg 23 on related party transactions applies to an SME-listed entity whose paid-up equity exceeds ₹10 crore or whose net worth exceeds ₹25 crore.
The exemption is narrower than it was. From 1 April 2025, Reg 23 on related party transactions applies to an SME-listed entity above either size test, so an SME-listed entity can no longer treat the whole of Reg 17 to Reg 27 as switched off. The and-or difference also matters: the exemption needs both figures satisfied, while the Reg 23 carve-in bites where either is exceeded.
Deadlines counted from an event
Reg 17 to Reg 27, and Reg 46(2) clauses (b) to (i), do not apply to a listed entity with paid-up equity share capital not exceeding ₹10 crore and net worth not exceeding ₹25 crore as at the last day of the previous financial year, nor to an entity listed on the SME Exchange. Reg 46(2)(t) and Reg 17A were brought into the exempted list with effect from 13 December 2024.
From 1 April 2025 Reg 23 on related party transactions applies to an entity listed on the SME Exchange whose paid-up equity share capital exceeds ₹10 crore or whose net worth exceeds ₹25 crore. The exemption for the rest of Reg 17 to Reg 27 is unaffected.
The rule
Reg 17 to Reg 27, and Reg 46(2) clauses (b) to (i), do not apply to a listed entity with paid-up equity share capital not exceeding ₹10 crore and net worth not exceeding ₹25 crore as at the last day of the previous financial year, nor to an entity listed on the SME Exchange. Reg 46(2)(t) and Reg 17A were brought into the exempted list with effect from 13 December 2024.
From 1 April 2025 Reg 23 on related party transactions applies to an entity listed on the SME Exchange whose paid-up equity share capital exceeds ₹10 crore or whose net worth exceeds ₹25 crore. The exemption for the rest of Reg 17 to Reg 27 is unaffected.
Who must comply
- A listed entity with paid-up equity share capital not exceeding ₹10 crore and net worth not exceeding ₹25 crore as at the last day of the previous financial year
- An entity listed on the SME Exchange
- From 1 April 2025 Reg 23 applies to an SME-listed entity whose paid-up equity exceeds ₹10 crore or whose net worth exceeds ₹25 crore, so the exemption no longer covers related party transactions for those entities.
Statutory basis
Before you file
- Take the paid-up equity share capital and the net worth as at the last day of the previous financial year.
- Confirm whether the entity is listed on the SME Exchange.
- Test the Reg 23 carve-in against both the ₹10 crore and the ₹25 crore figures, because either one triggers it.
How to file
- Test the entity against both limbs of Reg 15(2) at the start of each financial year.
- Apply Reg 23 to an SME-listed entity that exceeds either figure.
- Start complying with Reg 17 to Reg 27 as soon as the entity moves outside the exemption.
No separate filing. Determines which governance provisions apply
If you miss it
No per-day exchange fine is asserted here, because this provision is not on the fine table we have verified. A breach of a corporate-governance condition is a breach of listing conditions, which section 23E of the Securities Contracts (Regulation) Act reaches at not less than ₹5 lakh and up to ₹25 crore. SEBI's other head is section 15HB of the SEBI Act, the residual penalty that applies where the Act provides no specific penalty for the contravention. Section 15A(b) is not the right head, because a missed meeting is not a failure to furnish information.
- The default shows in the quarterly governance report inside Integrated Filing (Governance), so it becomes visible to the exchange and to investors without any separate complaint
- SEBI has moved to a settlement route for many governance defaults, which still carries a settlement amount and an admission on the record
- An entity that relies on the exemption after growing past either figure has usually also missed the committee constitutions, so the first default is rarely the only one
Recent changes affecting this
Common questions
Are SME-listed entities exempt from related party transaction rules?
Not since 1 April 2025 if they are above either size test. Reg 23 now applies to an SME-listed entity whose paid-up equity exceeds ₹10 crore or whose net worth exceeds ₹25 crore.
Is the small-entity test one figure or two?
Two, and both have to be satisfied for the exemption: paid-up equity share capital not exceeding ₹10 crore and net worth not exceeding ₹25 crore, taken as at the last day of the previous financial year. For the Reg 23 carve-in, exceeding either figure is enough.