As part of its efforts to increase transparency and empower public shareholders in listed companies, the Securities and Exchange Board of India (Sebi) will soon announce a new set of corporate governance norms. The new set of guidelines could be announced as early as next week when the board of the capital market watchdog meets in Mumbai on Tuesday.
Speaking at a corporate governance seminar organised by industry body CII, Sebi chief UK Sinha said the new framework would realign the existing norms with the Companies Act. For listed companies, however, Sebi will lay down specific norms that are not even included in the Companies Act,
“We have already placed our document for consultation. Our consultation is almost over. So, we are now going to promulgate our rules very soon,” said Sinha. “For listed companies, I will like to tell you, we are going to do something over and above what is specially mentioned in the Companies Act, in the interest of corporate governance of the large corporates,”
In January, the capital market watchdog released a consultative paper on corporate governance norms suggesting companies need to formulate effective whistle-blower policies while providing an ecosystem for independent directors to perform their roles in a better manner. The paper also proposed that independent directors should be appointed by minority shareholders and that regulatory support in the form of funds to aid class action suits should be made available.
Meanwhile, delivering the keynote address, Sinha urged companies to be extra conscious about compliance to the Companies Act and comply in spirit rather than letter. Referring to the international corporate governance practices, he said that companies need to look beyond how business is done in India and adopt international best practices in a globalised world.
When questioned whether India Inc was prepared to adapt to these new changes, Sinha said, “The question is not whether we are prepared. The question should be are we taking measures to prepare India Inc for long term growth of business and industry of the country. India should prepare for it.”
“People are not going to be satisfied with what gift you give (at AGMs) and what tea you give. People are going to ask very difficult questions. This demand has further been exacerbated because of certain actions taken by corporations themselves in India and whole world,” said Sinha.