Committee working on model more suited to Indian companies
Deevakar Anand | April 13, 2011
Market regulator Securities and Exchange Board of India (Sebi) pitched for a model of corporate governance more suited to the Indian companies and stakeholders. Usha Narayanan, executive director of the board, informed at an Assocham event here on Wednesday that a Sebi committee is in the process of evolving a new approach to corporate governance.
“We are in the process of reviewing the existing model and a committee is working to evolve an alternate model of corporate governance,” she said while adding that the current one is a model closer to the practice followed in the west.
She also said that Sebi has asked the ministry of corporate affairs (MCA) to broaden the scope of section 55 (A) of Companies Act 1956 which is now clause 22 of the Companies Bill that is to be presented in Parliament. The regulator wants the clause tweaked to enable it conduct enquiries into complaints against companies and into company claims even after the closing of the initial public offerings.
“Corporate governance norms for listed and to-be-listed companies should be completely in Sebi's domain," she said while underlining that standing committee on finance has also recognised the need for sectoral regulator having more stringent rules than what is contained in the 1956 Act.
This comes in the backdrop of Sebi chairman U K Sinha's letter to economic affairs secretary R Gopalan asking for powers to access email and call records from telecom service providers to track market transactions - insider trading and price manipulation.
Narayanan also said that Sebi is working on reporting norms reforms.The board proposes to have a unified platform where the companies could file their financial reports which would then be passed on to all the exchanges relieving the companies of the burden of multiple filing. Sebi is mulling a specialised cell to evaluate the financial reports, she added.
On the issue of end use of IPO funds, she said, it is completely in the domain of the MCA as Sebi deals with disclosures. She said that the MCA also looks into it through its early warning system even as exchanges provide the MCA with quarterly results, as and when required.
While accepting that the issues could not be solved overnight, she also urged the investors to be more informed and alert to stay safeguarded. "It is after all the responsibility of the shareholders to question whether their money has been duly utilised,” echoed former MCA director Manoj Arora who was also present at the event.
Earlier at the event, Assocham national council on corporate affairs chairperson Preeti Malhotra called on the government to fill in the regulatory gaps while pointing to ambiguities and difficulties that the companies face as a result of overlapping ambit of various regulators like the Sebi, RBI, MCA and competition commission of India.
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