The corporate regulator will scrutinise companies with operations in emerging markets, following the collapse of several high-profile issuers overseas.
A report by the Australian Securities and Investments Commission found the majority of Australian-listed companies with entities in emerging markets did not have enough independent directors on their boards and most did not make meaningful regular disclosures to the Australian sharemarket.
The companies - more than half of which were miners - were also more poorly equipped to deal with bribery, fraud and mismanagement due to the complexity of their ownership structures, contractual arrangements and poor access to reliable information, it said.
"ASIC is shining a light on emerging market issuers and their governance and disclosure because we want to lift the sector's transparency," ASIC commissioner John Price said.
"Just because you operate in a variety of geographic locations, and maybe you don't have a big market capitalisation, doesn't mean you can forget about mandatory legal requirements."
Companies with exposure to emerging markets now account for a third of those listed on the Australian stock exchange. ASIC says the majority - 56 per cent - are miners, and 58 per cent have a market cap under $50 million.
The regulator said it was prompted to investigate the sector after the collapse of Toronto-listed Chinese company Sino-Forest last year, which fell over after accusations of fraud revealed it had failed to account for 800,000 hectares of forest plantations in rural China.
It said it had further investigated several companies for suspected breaches of the Corporations Act following its review, and alerted the Australian Securities Exchange to some disclosure breaches.
Steven Fleming, a partner at law firm Jones Day who advises boards on governance issues in emerging markets, said the risks in those countries was vast and qualified for a much broader investigation by the regulator.