M/s XYZ Limited is a listed company. It is subsidiary of M/s NMF limited which is a prominent consumer durable company and owns many big brands. M/s XYZ has entered into an agreement with M/s NMF Limited for the sale of

As per Regulation 23(1A) of SEBI (LODR) Regulation, 2015 with effect from July 01, 2019 a transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceed 5% of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity. Since in this case, the royalty payment of ₹ 400 crore by M/s XYZ Limited to M/s NMF Limited is more than the 5% of the consolidated turnover (i.e., ₹ 350 crore) of M/s XYZ Limited, so this transaction would be considered as a material transaction in view of Regulation 23(1A).