Omnibus approval

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31 August 2018 What is omnibus approval in related party transactions

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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01 September 2018 OMNIBUS APPROVAL FOR RELATED PARTY TRANSACTIONS:

MCA, on 14th Dec, 2015, issued the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015.

Through this amendment, MCA has inserted Rule 6A under Chapter XII Rules to deal with the authority of Audit Committee to grant Omnibus Approval for related party transactions on an annual basis.

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:-

# Maximum value of the transactions, in aggregate, which can be allowed under the omnibus route in a year;
# The maximum value per transaction which can be allowed;
# Extent and manner of disclosures to be made to the Audit Committee at the time of seeking omnibus approval;
# Review, at such intervals as the Audit Committee may deem fit, related party transaction entered into by the company pursuant to each of the omnibus approval made;
# Transactions which cannot be subject to the omnibus approval by the Audit Committee.

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