Market regulator SEBI clarifies on validity period of omnibus approval for related party transactions
In case of omnibus approvals for material related party transactions (RPTs), obtained from shareholders in general meetings other than AGMs, the validity of such omnibus approvals will not exceed one year, Sebi said.
Sebi on Friday clarified that shareholders' omnibus approval for related party transactions given in an annual general meeting will be valid up to the date of the next such meeting for a period not exceeding 15 months.
In case of omnibus approvals for material related party transactions (RPTs), obtained from shareholders in general meetings other than AGMs, the validity of such omnibus approvals will not exceed one year, Sebi said.
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The move is aimed at facilitating listed entities to align their processes to conduct annual general meetings (AGMs) and obtain omnibus shareholders' nod for material RPTs.
This comes after the Securities and Exchange Board of India (Sebi) received representations seeking clarity on the period of validity of the omnibus approval where the transactions are material and shareholders' approval is also required.
Sebi's LODR (Listing Obligations and Disclosure Requirements) rule specifies that omnibus approval granted by the audit committee will be valid for a period not exceeding one year and will require fresh approvals after expiry of one year and as per the Companies Act, the time gap between two AGMs cannot be more than 15 months.
Last month too, the regulator had provided clarity on the applicability of new norms for RPTs and said that companies need not seek fresh approval from shareholders in case such deals were cleared prior to April 1.
The watchdog issued a circular on RPT norms amid calls from various quarters, including industry bodies, to postpone the implementation of the new framework, which is to come into effect from April 1.
"For an RPT that has been approved by the audit committee and shareholders prior to April 1, 2022, there shall be no requirement to seek fresh approval from the shareholders," Sebi had said.
"An RPT that has been approved by the audit committee and shareholders prior to April 1, 2022, there shall be no requirement to seek fresh approval from the shareholders," it had added.
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