SEBI looking for ways & means to improve corporate governance standards
Published: Nov 10, 2017
By TIOLCORPLAWS News Service
MUMBAI, NOV 10, 2017: THE watchdog of the stock market, Securities and Exchange Board of India (SEBI) is exploring divergent measures to improve corporate governance standard in India. Speaking at a corporate governance summit on 'Gatekeepers of Governance', Mr. Ajay Tyagi, the Chairman, SEBI, today asserted that the need of the hour is to have 'a back to basics reconceptualisation of what sound corporate governance means' and a debate away from vested interests. To have an effective enforcement mechanism, SEBI will have to do some out-of-the-box thinking, he added.
The observations also come against the backdrop of concerns in certain quarters about the overall functioning of boards in various companies and corporate governance standards. While shareholder directors may have imminent 'conflicts of interest', 'independent directors' may not have so much proverbial 'skin in the game', Mr. Tyagi said. It becomes imperative to ensure that equal say is imparted to the voice of both directors on a company's board, he added.
At present, there is no specific provision for such a code under the securities regulations. For mutual funds, some stewardship principles have been adopted, such as on voting and conflict of interest. In March, the Insurance Regulatory and Development Authority of India (IRDAI) issued a stewardship code for companies in its ambit. The stewardship code will make it a formal mandate for institutional investors to play a stewardship role, rather than remain silent spectators with respect to the affairs of their investee companies
Citing the World Bank's Ease of Doing Business, report, where India ranked in protection of minority shareholders improved to 4th from 13th, Mr. Tyagi said effective implementation of stewardship principles by all institutional investors may lead to further improvement in India's current ranking in the 'protection of minority shareholders'. The Chairman, SEBI concluded by saying upholding the principles of good governance 'boils down as individuals' irrespective of 'how many rules are prescribed, how many guidelines are issued and how many enforcement actions are taken.'