The disclosure-based regime adopted for the Indian securities market underpins the importance of good governance practices by issuers, according to Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch.
“If investor confidence is a ship on rolling seas, information is the navigator’s compass and good governance its anchor,” she said in the chairperson’s statement in SEBI’s Annual Report 2022-23.
“It would not be in the interest of anyone if, either investors become fearful of investing because of anxiety about governance, or if the greed of conflicted parties were to manifest in the form of fraud on minority shareholders,” she added.
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As listed entities expand globally and engage in various activities, their structures and transactions grow more intricate. Although promoters and minority shareholders generally share common interests, Related Party Transactions (RPTs) can lead to ‘significant misalignment of interest’.
SEBI has taken action against listed companies for governance lapses, particularly related to RPTs. To ensure transparency, SEBI aims to empower Audit Committees, Boards, and investors to make informed decisions regarding these transactions.
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According to SEBI, the key philosophy behind the regulatory regime adopted by the capital markets regulator is of empowering the market participants to take informed decisions by providing them with relevant, comprehensive and correct information in a timely manner.
“Disclosures mandated for listed companies and mutual funds are focused on addressing the risk of information asymmetry in the market,” the chairperson said in her statement.
If investor confidence is a ship, then information is compass and good governance its anchor: SEBI chief - Moneycontrol
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