Sebi will re-look corp governance practices: Bajpai

With corporate scandals taking a heavy toll in the US, the market regulator is reviewing corporate governance practices in India. The Securi...

With corporate scandals taking a heavy toll in the US, the market regulator is reviewing corporate governance practices in India. The Securities and Exchange Board of India (Sebi) is actively taking a re-look at corporate practices in the country, especially addressing issues of company boards, directorship numbers, board agendas and reporting.

Talking to the media at the sidelines of Centre for Corporate Governance seminar on ‘Unleash the power of your board’, Sebi chairman G. N. Bajpai said the regulator would look at these issues via its corporate governance council headed by Infosys chairman N. R. Narayana Murthy.

Addressing the meet, Bajpai had said that corporates needed to realise that having balance sheets that far surpassed those of most governments, they had a responsibility to be transparent and realise their commitment to society.

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According to Bajapi, Sebi was considering a move to put in place a corporate governance rating instrument. The instrument is aimed at allowing shareholders/stakeholders to assess the functioning, value creation and value sharing conducted by corporates.

“A company’s board should not be a congregation of friends and family, since their presence would only be detrimental to the company,” he said. Bajpai said that corporates command a country’s physical, financial and human resources and, therefore, must be judged on three categories: their commitment to society, their adherence to the law and also whether their governance sufferers from any ‘jaundice’.

UTI chairman M. Damodaran said, “with corporates influencing both social and political order, they not only needed to win the confidence of shareholders but all stakeholders in general.” He said the need to have ‘old-timers’ constituting at least 1/3rd of boards and that full time directors needed to be increased in all boards for continuity sake. He added that not only was a nomination committee for boards a requirement, but having a national committee to oversee board directorships was of utmost importance.