Module: | Specialized Audits, Tech & ESG Disclosures
Q97: Consider the following statements regarding the exemptions for Key Managerial Personnel (KMP) benefit arrangements under the SEBI LODR (Fifth Amendment) Regulations, 2025:
1. The amendment refined the carve-out for related party transactions, expressly covering the benefit schemes of directors and KMPs of the listed entity or its subsidiary, and their relatives.
2. Benefit schemes that selectively favor specific promoter family members without genuine uniformity of terms are fully exempt from the RPT approval framework.
3. Schemes that fail to maintain uniform terms across eligible employees must be brought within the full RPT approval and disclosure framework.
Which of the above statements is/are incorrect?
2. Benefit schemes that selectively favor specific promoter family members without genuine uniformity of terms are fully exempt from the RPT approval framework.
3. Schemes that fail to maintain uniform terms across eligible employees must be brought within the full RPT approval and disclosure framework.
Which of the above statements is/are incorrect?
✅ Correct Answer: B
🎯 Quick Answer:
B. Only 2 is incorrect.SEBI provides exemptions from strict RPT voting rules for these schemes, provided they are applied fairly.
Structural Breakdown: Statement 1 is correct; the 2025 amendment broadened the explicit wording to cover subsidiaries and relatives.
Statement 2 is incorrect; SEBI specifically closed a loophole, stating that schemes designed to selectively favor promoters without uniform application do not qualify for the exemption.
Statement 3 is correct; discriminatory schemes revert to standard, strict RPT scrutiny.
Historical/Related Context: Promoters were increasingly using "employee welfare trusts" or "benefit schemes" as a backdoor to grant themselves and their relatives massive, unapproved financial payouts, bypassing minority shareholder votes.
Causal Reasoning: Requiring genuine uniformity ensures that a scheme is a legitimate HR retention tool rather than a disguised mechanism for promoters to siphon corporate wealth.