SEBI Stringent Corporate Governance Norms regarding Related Party Transactions approvals

According to Securities & Exchange Board of India (SEBI), all ‘material’ related party transactions need to be approved by non-related party shareholders. Material means greater than 5 per cent of turnover or 20 per cent of net worth. However, as per the new company law, related party transactions require such shareholder approval only if not at ‘arms-length’ or not in the ‘ordinary course of business.’