I. Introduction
The SEBI Circular of June 26, 2025, requiring Industry Standards to have minimum information to be disclosed to the Audit Committee and shareholders to authorize related party transactions, has revived the interest in the structure of the shareholder approvals and the responsiveness requirements of that approval. In the modern world, omnibus approvals, i.e., the shareholder authorisation of very large sets of related-party transactions (RPTs), have come to be a convenient tool within a large corporate group in which related-party transactions (RPTs) take place on a large scale.
Omnibus approvals, instead of the different treatment of single transactions, combine them into a single blanket license through a broad delegation process. In this respect, the approval of the shareholders, which must indicate an informed and specific judgment, is at risk of being a formal act without any connection to the underlying facts of each transaction.
It has a basic contradiction to the current business of corporate governance in that to deal with the complexity of large companies, one would need omnibus approvals, which brings about transparency and accountability issues. The misleading may also be in the form of regulatory structures or market players that consider the shareholder approval to be the veil of silence and is therefore an assurance that everything is well with the processes and with the fiduciary diligence.
This is due to expediency and not ideality: omnibus authorisations are unavoidable aspects of the modern existence of companies, albeit that they should be rewritten so as to deliver the same result without offering a follow-up malaise. It must be reformed on three structural principles, which are, tougher qualitative distinctions between types of transactions, more internal control and more post facto disclosure, and transparency.
II. Consent Without Deliberation: The Doctrinal Fragility of Ex-Ante Authorisations
The legal basis of shareholder pre-approval is based on a justifiable premise: owners can legitimise ex-ante governance arrangements and thus allow transactions, otherwise conflicted. The core of fiduciary doctrine clashes with that premise. Care and loyalty duties assume that the current evaluation of facts, choices and comparative value. The informational situation and deliberative seriousness that is offered by a board thinking about a discrete deal cannot be replicated by a one-off, omnibus resolution.
The intellectual weakness becomes even greater when doctrinal approvals are open-ended in both scope and time. A body of shareholders can accept a class of transactions with indistinct boundaries or no sunrise/sundown, and effectively delegate the normative decision-making to the managers with not only commercial incentive but also relational proximity to the counterparty. Ex-post remedies, such as rescission, damage or disgorgement, are responsive and unpredictable but at the same time necessary. They fail to recover the modern analysis necessary to preclude value-destructive transactions or keep minority interests outside coercive mechanisms of governance.
III. Structural Blind Spots in Ex-Ante Approvals
The blind spots formed by category-based authorisations are due to the multidimensional character of conflicts of interest that are contingent. The economic importance of a transaction cannot only be a matter of headline monetary value; it is determined by strategic context, contractual interlocks and the distribution of informational advantage. A small intercompany guarantee that enables third-party financing is, in effect, likely to be the keystone of an extended strategic entrenchment, and a high-value supply contract priced at market rates can be associated with modest governance risk. These distinctions are no longer present in omnibus approvals which consider transactions fungible components of a kind, and do not see non-monetary vectors of harm.
IV. Thresholds Fetishism and the Issue of Quantitative Legitimacy.
It is a regulatory reflex to help oneself to the monetary thresholds, and this is understandable; this saves litigation, in addition to making it possible to predictably comply. However, there is an issue of quantitative fetishism, which gives numbers a pre-eminence over qualitative extractive mechanics. This numerical bifurcation gives rise to two issues. First, over-inclusion wastes the time of shareholders, as it ultimately contributes little value in governance. Second, and worse, thresholds are not indicative of low-value transactions that generate structural dependency, information asymmetries or preferential treatment that each accrues to the detriment of minority shareholders.
Materiality of RPT is not just based within the ambit of numbers. It is intersected with strategic leverage, duration, exclusivity and identity of ultimate beneficiaries. Thresholds should not be considered in policy design as moral universals but need to integrate qualitative filters into tests in trigger architecture, and require answering the question of whether a transaction would alter control dynamics substantially, or introduce sole arrangements, or substantially alter expected cash flows.
V. Jurisdictional Experiments in Managing Blanket Approvals
There are various other design logics proposed by comparative practice. In other regimes, thresholds are accompanied by qualitative triggers inquiring whether a transaction is out of the ordinary in relation to the normal operations of a firm. Some others turn to ex-post fiduciary enforcement: Courts can consider approval by the shareholders a significant but not invariably decisive fact, subjecting any transaction between interested parties to an intense level of examination, testing both process and price. These models carry out various functions: qualitative triggers front-load context into the approval process, and ex-post discipline the process correctly when it fails.
Transplanting comparative lessons is sensitive to institutional issues. Muscular ex-post review courts assume an ecosystem of enforcement structures capable of accommodating complex fiduciary litigation; disclosure-based regimes assume vigilant markets and active communities of analysts. Neither pure ex-post correction nor market deterrence will be able to replace strong ex-ante and committee-level protection in any market where ownership is concentrated, or where enforcement resources are limited. Therefore, experiments in jurisdiction are practical as guidelines to emulate, rather than maps to follow.
VI. Ex-Post Transparency as a Fiduciary Corrective
Given the situation, if omnibus approvals[1] are the way to go, ex-post transparency must be prioritised. Reporting at the transaction level after an omnibus authorisation will restore the elements of deliberation by making visible the actual contents that the previously abstract consent enabled. Instead of just stating amounts, effective disclosures should explain the commercial rationale, key contractual terms, articulation of valuation inputs or benchmarks, identification of any related parties, and keep a record of any independent opinions obtained.
In jurisdictions where regulatory reform is being undertaken, the suggestion to harmonise the content and rhythm of ex-post disclosure of RPT reflects an understanding that figures are inadequate. This architecture is reinforced by a so-called comply-or-explain overlay: in situations where full disclosure is actually impracticable due to confidentiality reasons, the companies should offer reasoned explanations along with declarations by independent directors of the measures taken. Meaningful disclosure requires that markets and regulators act: surveillance measures should be used by stock exchanges to indicate poor RPT reporting, reasoned attestation should be published by audit committees and enforcement agencies permitted to investigate and, where needed, penalise..
VII. Redesigning Omnibus Approvals through a Hybrid Oversight Model
An effective redesign should start by reducing the number of permissible omnibus approvals to repetitive, and low conflict transactions with standardised terms that can be easily benchmarked. Transaction-specific approval with a signature of an independent director and, where relevant, shareholder of an independent director, should be adopted to deal with long and strategic, exclusive, or structurally sensitive transactions. This triage can be operationalised by a lightweight qualitative screening tool at the audit committee level: it may involve such criteria as strategic centrality, duration, contractual exclusivity, counterparty identity and asymmetric information potential.
This hybrid model plays a vital epistemic role that is played by independent directors. Where the uncertainty in valuation, or indeed conflict is acute, the independent directors must demand third party fairness or valuation opinion and include those as part of ex-post disclosure package. A combination of these will restore a linkage of accountability between ex-ante authorisation and a substantial ex-post review.
VIII. Conclusion
It is believed that omnibus approvals will be the order of the day in current corporate practice, as mega-corporations will not find it easy to explain to their stockholder why they should subject every repeat transaction to a vote of the stockholders. This policy does not seek to abolish, but reformulate, the assent obtained by procedural means. It achieves these through narrowing the focus, providing independent control, setting up qualitative filters and suggesting ex-post disclosure of information.
A disclosure-based, director-based, hybrid model shields the functioning effectiveness of amalgamative processes yet protects the fiduciary expectations of the adverse partakers, who anticipate that customary assent, albeit as a predetermination, will wane in accountability and attention.
(This post has been authored by Shivanshu Shivam and Saksham Shivam, 3rd-year students at CNLU, Patna)
CITE AS: Shivanshu Shivam and Saksham Shivam, ‘Interpreting “Ex-Ante Consent, Ex-Post Risks: The Transparency Challenge of Omnibus Approvals in Related Party Oversight’ (The Contemporary Law Forum, 27 December 2025) <https://tclf.in/2025/12/27/ex-ante-consent-ex-post-risks-the-transparency-challenge-of-omnibus-approvals-in-related-party-oversight/> date of access