To strengthen corporate governance, more changes might be required in the Companies Act as well as in the Sebi regulations for listed companies, Union Minister Jayant Sinha said on Tuesday.
“We are seeing major changes on corporate governance, (and) major changes in the nature of capitalism. This is well established within the framework we are following being a pro-poor as well as pro-market government,” he said at an event organised by FICCI here.
Sinha, minister of state for finance, said, “There are more changes that might be required in Companies Act, there are more changes that may be required how Sebi deals with listed entities...to strengthen corporate governance.”
Recalling the time when the National Democratic Alliance (NDA) came to power in 2014, he said there was lack of confidence in governance both in the government as well as corporations. As a result of this, foreign direct investment and domestic investment came to a halt, he said.
But things improved on governance front after the new government took charge in May 2014. “So, governance is going to be very important for us. If we are not able to sustain and follow the best standard of corporate governance it will be very difficult for our corporate to attract investment and talent to build businesses,” he said.
Therefore, the whole process and manner of corporate governance becomes very important, he added.
Sinha said the introduction of the bankruptcy code in Parliament would have a big impact on governance practices and “our effort is to balance the interests of the majority and minority shareholders as well as strengthening the rights of creditors.”
Addressing the International Conference on corporate governance, Sinha said good corporate governance was essential for instilling confidence among investors in the Indian market as also to strengthen Indian corporations to be able to compete globally.
Sebi whole-time member Prashant Saran said corporate governance should be seen as a way of survival, for doing business, not merely as means towards earning larger returns.
When asked about Sebi’s decision on NSE’s self-listing, Saran said that “some decisions will be taken by the respective departments”.
With regard to crowd-funding, he said, “We are not giving any time-line” when the final norms will be put in place.
Indian Institute of Corporate affairs (IICA) DG and CEO Bhaskar Chatterjee said the way business is conducted in India by following good governance practices should become a benchmark for the rest of the world.
The conference was aimed at providing a unique opportunity to corporations to understand expectations of policy makers and discuss with them the impediments in implementing laws on the ground, he added.
“...though the knowledge test criteria for independent directors has been built in the Companies Act, it is important to ensure they are not hauled up as a routine measure, for no fault of theirs and especially for non-compliance of provisions beyond the Companies Act. This could otherwise have a serious impact on directors where the intention is not of breach of trust or default and actions were honest,” FICCI President Harshavardhan Neotia and Chairman Ambuja Neotia Group said.