Financial or even service-related transactions by any subsidiary of a listed company may come under heavy scrutiny by the markets regulator, a SEBI paper reviewed by BusinessLine shows.
After it came to light in the IL&FS scam that the company had used its subsidiaries as a conduit to extend loans to related parties and other group companies, a SEBI working group has now recommended that transactions by subsidiaries of listed companies also be included in the definition of related party transactions (RPTs).
Further, the working group has recommended that the audit committee of a listed company share incremental onus and responsibility for RPTs. It has suggested a long check-list that the committee will have to fulfil before approving RTPs.
