Provisions with reference to Related Party Transactions under SEBI (LODR) Regulations 2015 are wider in scope than Section 188 of the Companies Act, 2013 and the rules prescribed thereunder. Discuss.

As per the provisions contained in section 188, all types of Related Party Transactions (RPTs) prescribed under clauses (a) to (g) of sub section (1) must be approved by the board of directors of the company. This provision appeared to enable the management to enter into any RPT with a related party without having to seek any approval but only that of the board of directors of the company. Further, the section provides the following relaxations: nothing in section 188(1) shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm's length basis. the requirement of passing the resolution under first proviso to section 188(1) shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.] SEBI notified the SEBI (Listing Obligations and disclosure Requirements) regulations 2015 on 2nd September 2015. Provisions of these regulations are applicable to all listed companies from 2.12.2015. Listed companies are bound to comply with the stipulations contained in these regulations. Regulation 23 of these regulations provides that all RPTs require prior approval of the Audit committee of the company. It also states that any transaction with a related party should be considered material if the transaction(s) to be entered into individually or taken together with all the previous transactions during a financial year exceeds 10% of the annual consolidated turnover of the listed company as per the last audited financial statements of that company. Any RPT which comes within the 'material' definition should be approved the members of the company. Resolution seeking the approval of members should make complete disclosure on the impact of the RPT and the details of benefits that would accrue to the directors and their relatives as a consequence of entering into the RPT should be disclosed in the explanatory statement on every resolution seeking members' approval. Regulation 23(4) specifies that related parties should abstain from voting on the resolution for approval of the RPT whether the entity is related party to the particular transaction or not. As such promoters, directors and their relatives interested in any resolution for approval of RPT should not exercise their votes on such resolutions placed for member's approval. Regulation 23(3) stipulates that the Audit Committee may grant omnibus approval for RPTs proposed to be entered into by the company, subject to the following conditions: Audit committee should lay down the criteria for granting the omnibus approval in line with the policy on related party transactions of the listed entity and such approval should be applicable only for transaction of repetitive nature which are on an arm's length basis. Audit committee should satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity; Omnibus approval should specify the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into, (ii) the indicative base price / current contracted price and the formula for variation in the price if any; and (iii) such other conditions as the audit committee may deem fit. Audit committee should ensure that where omnibus approval could not be foreseen due to non-availability of the required information, the maximum value of such transactions should not exceed rupees one crore per transaction and in such cases it may grant omnibus approval for such transactions. The audit committee should review the details of related party transactions once in a every quarter pursuant to each of the omnibus approval given. Such approvals will be valid for a maximum period of one year and shall require fresh approval after the expiry of such period. From the above, it could be seen that SEBI regulations are wider in scope in controlling and regulating all the related party transactions so that outside shareholders and other stakeholder's interest are taken care of and the persons from the management do not take any undue advantage of their position.