The Securities and Exchange Board of India on 8th April 2022 has issued clarification on the period of validity of the omnibus approval where the transactions are material and shareholders ’approval for material related party transaction.
As per regulation 23(3)(e) of the SEBI LODR Regulations, the 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) and Section 96(1) of the Companies Act, 2013 specifies that the time gap between two Annual General Meetings(AGMs) cannot be more than fifteen months
In order to facilitate listed entities to align their processes to conduct AGMs and obtain omnibus shareholders’ approval for material RPTs, it has been decided to specify that the shareholders’ approval of omnibus RPTs approved in an AGM shall be valid upto the date of the next AGM for a period not exceeding fifteen months.
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.
