New Delhi, Aug. 5 -- The proposal of the Securities and Exchange Board of India (Sebi) to overhaul related-party transaction (RPT) rules may offer long-awaited compliance relief for India's large listed companies and reshape governance standards, but it also opens the door to fresh regulatory arbitrage, legal experts caution.

Announced on Monday, the capital markets regulator's proposals, issued as a consultation paper, seek to replace the one-size-fits-all threshold for material RPTs with a scale-based model tied to the company's turnover. The move is expected to impact over 2,000 listed firms and significantly reduce the volume of routine intra-group transactions requiring shareholder approval, by as much as 60% among the top 100 compa...