SEBI Update: Clarification on applicability of Related Party Transactions and shareholders approval

✓ SEBI vide it's circular dated April 8, 2022, clarified on following:

✓ Provisions: Regulation 23(3)(e) of the SEBI LODR Regulations specifies that omnibus approval granted by the audit committee shall be valid for a period not exceeding one year and shall require fresh approvals after expiry of one year. Regulation 23(4) of the SEBI LODR Regulations requires shareholder approval for material related party transactions (RPTs).

✓ Companies Act, 2013: Section 96(1) of the Act specifies that the time gap between two Annual General Meetings (AGMs) cannot be more than fifteen months.

Query: What's the validity of period for the omnibus approval where the transactions are material and shareholders’ approval is also required.

Response: The shareholders’ approval of omnibus Related Party Transactions (RPTs) approved in an Annual General Merting shall be valid upto the date of the next AGM for a period not exceeding fifteen months.

- Further, in case of omnibus approvals for material RPTs, obtained from shareholders in general meetings other than AGMs, the validity of such omnibus approvals shall not exceed one year.

✓ To read SEBI Circular, please click here

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