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Sebi should not dilute RPT norms IiAS

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Proxy advisory firm Institutional Investor Advisory Services ( IiAS) has asked the market regulator to stick to its rules governing related party transactions ( RPT). IiAS has slammed the recommendation by the ministry of corporate affairs ( MCA) to dilute the Securities and Exchange Board of India ( Sebi) rules as an anti- investor move.
The MCA had asked Sebi to align its provisions regarding RPTs with the Companies Act 2013. “ IiAS believes Sebi should hold its own. Sebi’s provisions on related party transactions protect minority interest, while MCA has diluted its position to promote the ‘ ease of doing business’,” the firm said in a report on Thursday.
The MCA has steadily diluted its stance on related party transactions since mid- 2014: It lowered the threshold to pass resolutions to 50 per cent from 75 per cent, and prevented only interested parties from voting, while allowing related parties to vote.
Sebi has not aligned itself to the new regulations — and rightfully so, the advisory said.
“Undeniably, having two sets of regulations makes it complex for companies to operate. Such complexity is unnecessary and an alignment of regulations is imperative — in the interest of minority shareholders, the Companies Act, 2013, needs to align itself to Sebi’s Clause 49 requirements for listed companies, and not the other way around,” the firm added.
Business Standard, New Delhi, 10th July 2015

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