Sebi clarifies validity period of blanket approval for related party transactions


Sebi clarified on Friday that omnibus shareholder approval for related party transactions given at an annual general meeting will be valid until the date of the next such meeting for a period not exceeding 15 months.

In the case of omnibus approvals for material related party (RPT) transactions, obtained from shareholders at general meetings other than general meetings, the validity of such omnibus approvals will not exceed one year, Sebi said.

The move aims to help listed entities align their processes for holding annual general meetings (AGMs) and get the green light from omnibus shareholders for material TPRs.

This comes after the Securities and Exchange Board of India (Sebi) received submissions seeking clarification on the validity period of omnibus approval when transactions are large and shareholder approval is also required.

Sebi’s Listing Obligations and Disclosure Requirements (LODR) rule specifies that the omnibus approval granted by the audit committee will be valid for a period not exceeding one year and will require new approvals after the expiration of one year and in accordance with the Companies Act, the time interval between two general meetings cannot exceed 15 months.

Also last month, the regulator clarified the applicability of the new standards for TCNs and said companies need not seek further shareholder approval in the event such transactions are approved before April 1.

The watchdog issued a circular on the RPT standards amid calls from various quarters, including industry bodies, to postpone the implementation of the new framework, which is due to come into effect on April 1.

“For an RPT that was approved by the audit committee and shareholders before April 1, 2022, it will not be necessary to seek further shareholder approval,” Sebi had said.

“An RPT that has been approved by the audit committee and shareholders before April 1, 2022, it will not be necessary to seek further shareholder approval,” he added.

(Edited by : Jomy Jos Pullokaran)


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