Maruti Suzuki India may have to seek approval from minority shareholders for a contract manufacturing deal with parent Suzuki Motor, if a final agreement is signed after October, a local report said.

According to Hindustan Times website livemint.com, several fund houses have raised concerns about the deal which has been approved in principle by the Maruti board.

New government laws for companies coming into effect on 1 April require audit committee approval for all material related-party transactions and the capital markets regulator Securities and Exchange Board of India, or Sebi, has said it also plans to make this mandatory from 1 October, the report said.

All such transactions would also require to be approved by shareholders through a special resolution, with related parties abstaining from voting, Sebi said.

A material related party transaction is defined as one which, in aggregate, exceeds 5% of the annual turnover or 20% of the net worth of the company during the financial year, whichever is higher.

“It is expected that purchase agreements between Maruti and Suzuki Gujarat will exceed this limit and hence will come under Sebi’s purview,” Amit Tandon, managing director of Mumbai based corporate governance adviser IIAS, was quoted as saying.

Last January, Suzuki Motor announced plans to spend JPY50bn ($486.3m) on a new 100,000-unit car plant in India to supply Maruti Suzuki India on an OEM contract basis, allowing the Indian affiliate to focus more on product development and marketing.

The plant will be built in Gujarat where Maruti purchased land in 2012 to expand its own facilities. Last August, Maruti decided to delay construction, citing a slowdown in the local market.

The proposed new factory, which was to have been erected in Mehsana, would have been Maruti’s third wholly owned car manufacturing complex. Its Gurgaon and Manesar plants are in the northern state of Haryana.

The livemint report said the announcement raised concerns Suzuki could sell the cars at a higher price to Maruti than it would have cost the Indian unit to produce them itself.

Maruti owns the land on which the factory will be built and will lease it to Suzuki Gujarat. A group of fund managers wrote to Maruti’s chairman RC Bhargava asking the company to reconsider the deal because it was unfair to the company’s shareholders.

A Maruti Suzuki spokesperson said the company “will continue to follow the legal requirements at every stage”.

“While Suzuki is free to set up another subsidiary, Maruti leasing out its land to Suzuki, and its agreement to buy vehicles from the new Suzuki subsidiary make the arrangement a related-party transaction,”” JN Gupta, managing director, SES Governance, a corporate governance advisory, told livemint.

But, if Maruti does hurry the deal through, though, there’s little minority shareholders can do, the report added.

Sriram Subramanian, founder and managing director, InGovern Research Services, another adviser, said the Indian company was seeking to rush the deal.

“These transactions should be ideally put to vote by minority shareholders as per the new Sebi norms,” Subramanian said. “Maruti Suzuki is seeking to rush these transactions before the new Sebi norms kick in.”