New Delhi, March 19 -- The Securities and Exchange Board of India's latest regulations on related-party transactions (RPTs) are an exercise in regulatory overreach. Indian law already prescribes several regulations for RPTs, but regulators have been mandating more disclosures and greater levels of rigour that have made compliance extremely onerous.

The two core pillars of RPTs are that pricing be done at arm's length and that the transactions happen in the ordinary course of business. At a basic level, the Companies Act takes care of these: boards are required to approve such transactions; in some cases, shareholder consent is also mandated with additional provisions that the concerned related party abstains from voting. Listed companies...