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Sebi to keep governance issue alive

BS Corporate Bureau in Mumbai

The Securities and Exchange Board of India will continue to focus on corporate governance issues in the country.

"Corporate governance is one of the strong pillars of our reform process and we are looking at the entire aspect," G N Bajpai, chairman, said at The Fourth Asian Roundtable on corporate governance on Monday.

Sebi has already laid down an ambitious action plan with clear objectives for three categories of the market participants - investors, markets and corporates.

For investors, it wants to create an environment to facilitate an informed decision making and ensure fairness in all their dealings.

Speaking on the occasion, Omkar Goswami, chief economist, Confederation of Indian Industry, said: "Corporate governance practices should be driven by the board. India has been addressing the governance issue in the past few years. We have groups such as Murugappa, Chennai, which have inducted professionals into the board of several companies for day-to-day operations," he added.

"The characteristic feature of Asian companies is that equity funding accounts for a small portion. Almost 40-55 per cent of the funding is through debt which is closely held in nature from banks and institutions. We do not see much assistance through bonds and other instruments," Goswami said.

According to Vincent Duhamel, State Street Global Advisors, Hong Kong, private-public partnership of companies, investors, financial industry players, government and regulations establishes effective, workable practices.

Globalisation and public-private partnerships will drive a harmonisation of standards across markets. Harmonisation will reduce compliance costs, while removing barriers to competitors and innovation.

It will also result into investor protection that will ensure increase in market confidence, opportunities, access and participation, Duhamel said.

Richar S Roque of William E Simon & Sons (Asia), said: "Key determinants in promoting shareholders participation include controlling shareholders' attitude toward the minority shareholders and role and attitude of regulators. Private equity funds can have a large role in promoting corporate governance and mentor young companies and entrepreneurs in best practices."

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