It would be applicable for transactions entered with a related party individually or taken together with previous transactions during a financial year.
Khatri noted that the provision is different from that present in the new Companies Act where related party transactions require shareholders' approval only if it is not at arms length or not in the ordinary course of business.
"Given that the Companies Act has been recently enacted, differences between the amendment and the Companies Act requirements in areas such as approval of related party transactions and limits for independent directors should have been avoided," he said.
Sai Venkateshwaran, Partner and Head of Accounting Advisory Services, KPMG in India, said that from merely placing related party transactions before the audit committee under the old corporate governance code the requirement now is far more elaborate on all fronts.
"All existing material related party contracts or arrangements as on the date of this circular which are likely to continue beyond March 31, 2015 shall be placed for approval of the shareholders in the first general meeting subsequent to October 1, 2014," the Securities and Exchange Board of India (Sebi) said in its circular on April 17.
Among others, listed companies would be required to disclose policy on dealing with related party transactions on their website as well as in the annual report.
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