Up-and-comer India is in the process of strengthening its disclosure rules, particulary those dealing with related-party transactions. Sebi chief C.B. Bhave commented at a recent OECD conference that the regulator will be more vigilant in the future regading related-party transactions. Auditors should play a strong role in identifying abusive transactions and mutual funds should exercise their influence to discourage abusive transctions and to encourage more frequent and higher quality disclosure to shareholders.
The OECD has, according to the Times of India, recommended that Sebi work to better define related-party transactions and the disclosure rules governing them. Further, companies engaged in related-party transactions should develop strong internal controls to monitor and assure accurate reporting of such transactions.
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