The Securities and Exchange Board of India (Sebi) on Wednesday clarified on the new norms governing related party transactions that will come into effect from April 1.

The regulator said listed companies need not seek fresh approval from the shareholders for a related party transaction (RPT) that has been approved by the audit committee and shareholders till March 31.

“Based on the representations received from listed entities and industry bodies, it has been decided to provide clarifications and guidance for smooth implementation of the amended Regulation,” Sebi said in a circular.

Sebi rules define a related party transaction as any transfer of resources, services or obligations between a listed entity and a related party regardless of whether a price is charged or not.

The regulator said all existing material related party contracts or arrangements entered into prior to April 1 should be placed for approval of the shareholders in the first general meeting after the deadline.

An RPT that has been approved by the audit committee prior to April 1, which becomes material as per the revised materiality threshold should be placed before the shareholders in the first general meeting held after April 1, Sebi said.

In the revised rules, the regulator has widened the ambit of related party transactions to include materiality thresholds for seeking shareholders’ approval, requirement to take approval for transactions between two foreign subsidiaries of the listed Indian holding company and change in the definition of related party owing to ownership, among others.

On Tuesday, it reiterated that a related party transaction for which the company's audit committee has granted omnibus approval, should continue to be placed before the shareholders if it is material in terms of the new norms.