The Ministry of Corporate Affairs has vide Notification dated 14th December 2015, amended the Companies (Meetings of Board and its Powers) Rules, 2014. They have been notified in the Official Gazette on 15th December 2015.
Rule 6A has been inserted as follows:
‘6A. Omnibus approval for related party transactions on annual basis – All related party transactions shall require approval of the Audit Committee and the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to the following conditions, namely:-
(1) The Audit Committee shall, after obtaining approval of the Board of Directors, specify the criteria for making the omnibus approval which shall include the following, namely:-
(a) maximum value of the transactions, in aggregate, which can be allowed under the omnibus route in a year;
(b) the maximum value per transaction which can be allowed;
(c) extent and manner of disclosures to be made to the Audit Committee at the time of seeking omnibus approval;
(d) review, at such intervals as the Audit Committee may deem fit, transaction entered into by the company pursuant to each of omnibus approval made
(e) transactions which cannot be subject to the omnibus approval by the Audit Committee.
(2) The Audit Committee shall consider the following factors while specifying the criteria for making omnibus approval, namely:
(a) repetitiveness of the transactions (in past or in future);
(b) justification for the need of omnibus approval.
It is provided that where the need for related party transaction cannot be foreseen and aforesaid details are not available, Audit Committee may make omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.
The omnibus approvals are valid for a period not exceeding 1 financial year and shall require fresh approval after the expiry of such financial year. Omnibus approval is not to be made for transactions of disposing of the undertaking of the company.
Rule 10 which pertains to “Loans to Director etc. u/s. 185” has been omitted.
Rule 15 which pertain to “Contract or arrangement with a related party” where prior approval of the company by a special resolution was required, will now require only an ordinary resolution.
