pri SEBI to tighten disclosure norms for related companies SEBI to tighten disclosure norms for related companies

Market regulator SEBI on Tuesday indicated that it could tighten the disclosure norms for transactions between related companies. “There is a scope for improvement…,” SEBI Chief C.B. Bhave said when asked if the measures taken by SEBI so far with respect to disclosure of related party transactions were enough.

Related party transactions typically involve deals between group companies, companies involved in joint ventures or between a holding company and subsidiaries.

Since the value of the transactions between related parties or associate enterprises may be doctored to avoid or reduce tax liabilities, it becomes imperative for the revenue authorities responsible for collecting both direct and indirect taxes to have principles in place for valuation of such transactions.

Speaking to newsmen here, Mr. Bhave also said there is no proposal as yet to separate the offices of the chairman and managing director in listed companies as prescribed in the voluntary corporate governance guidelines issued by the Corporate Affairs Ministry in December last year.

“They (the MCA’s corporate governance guidelines) are voluntary. Even now, Clause 49 (of SEBI’s Listing Agreement) says Chairman and Managing Director is the same… At this stage, we are not contemplating any change,” he said.

Mr. Bhave was attending the Organisation for Economic Cooperation and Development (OECD) Asian Roundtable on Corporate Governance organised by the Institute of Company Secretaries of India (ICSI).

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