Indian mid-cap governance is compliant where it needs to be informative
Related-party disclosure clears the listing requirement and tells a reader very little. That gap is a choice, not an oversight.
Ask an experienced independent director where Indian mid-cap governance is weakest and the answer is unlikely to be board composition, committee structure or meeting frequency. Those are visible, benchmarked and largely fixed.
The answer is usually related-party disclosure — an area where the letter of the requirement is routinely satisfied and the reader learns almost nothing.
Compliant and informative are not the same standard, and most of the sector is comfortably clearing the first one.
Rohit Malhotra, Independent Director
The mechanics of a compliant non-disclosure
A transaction is disclosed in aggregate, with a counterparty described by category rather than name, at a value that falls below the threshold requiring further explanation. Each of these choices is permitted. Together they produce a line item that confirms a transaction occurred and supports no judgement about whether it was priced fairly.
Audit committees see more than the market does, which is the point of an audit committee. The question is whether the gap between what the committee sees and what the filing says is the minimum necessary, or the maximum permitted.
A workable internal standard
- Name the counterparty where naming is lawful, regardless of threshold.
- State the pricing basis, not merely that the transaction was at arm’s length.
- Disclose the alternative considered, where one existed.
- Report the aggregate as a percentage of the relevant expense line, not only in absolute terms.
None of this requires regulatory change. It requires a board willing to hold itself to a standard that its peers do not, in an area where the reward for doing so is entirely reputational and arrives slowly.