New Code on Corporate Governance based on consultative paper soon: UK Sinha

Sinha also alluded to another trend recently visible globally; the alliance between investors.

December 20, 2013 6:33 IST | India Infoline News Service

“The world has changed dramatically in the last five years. There is a strong upsurge towards democracy, accountability and transparency. The corporate world cannot ignore these social and political happenings in the larger society because the considerations that govern the rest of society, the same guiding principles will also govern corporates,” said U K Sinha, Chairman, Securities & Exchange Board of India (SEBI) at CII’s 9th International Corporate Governance Summit.
“Adding to this is the US financial crisis where it was found that many corporations acted recklessly took too much risk, went for short term gains, had lax monitoring and had policies not in the best interest of shareholders. These have led to shareholder impatience and the strengthening of regulatory actions against corporates,” Mr Sinha explained.
Responding to the submission by Chandrajit Banerjee, Director General, CII that the regulations should not be framed keeping the outliers in mind, Mr Sinha responded that non-compliance was becoming quite rampant. Chairman, SEBI also pointed out that many companies are not complying with the Listing Agreement - Clause 40A on minimum public shareholding and Clause 49 on Corporate Governance and that SEBI would we well within its right to take action against them.
Sinha also alluded to another trend recently visible globally; the alliance between investors, especially institutional investors and activists, which is taking up issues on a major scale.
Sinha also referred to international corporate governance practices with the intention of driving the need to be in sync with the rest of the world and for corporates to go beyond how business is done in India and adopt international best practices in a globalised world.
Sinha urged companies to be extra conscious about compliance to the Companies Act and comply in sprit rather than the letter. Mr. Sinha informed that the new set of corporate governance guidelines for listed companies are being finalized and are expected to be announced shortly.
K V Kamath, Past President and Chairman, National Council on Corporate Governance & Regulatory Affairs, CII advised that corporate governance is a naturally evolving process and should be internalized. He further added that the regulatory nudge in the offing may turn out to be a hard shout to turn such practices from mere form to a due process.
A joint CII- Deloitte publication titled ‘Global Trends in Corporate Governance – since the financial crisis’ was released by Mr. U K Sinha at the summit. The paper gives an overview not only of the national trends but also global trends in corporate governance.
Earlier while welcoming Chairman, SEBI; Mr Chandrajit Banerjee, Director General, CII, highlighted CII initiatives in the domain and suggested that the new regulations that would soon be in place under the newly legislated Companies Act, 2013 should not be implemented in a manner that would be disruptive to business.

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