India at 7th Spot on Investor Protection; Ahead of U.S., Japan
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India at 7th Spot on Investor Protection; Ahead of U.S., Japan

Thursday, 30 October 2014, 09:41 Hrs
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NEW DELHI: In a big thumbs-up to reforms in laws governing companies and capital market regulations here, India has been ranked 7th for minority investor protection -- ahead of developed countries like the U.S., Japan, France and Germany.

New Zealand has topped the list and is followed by Hong Kong, Singapore, UK and Malaysia, as per a sub-ranking released by the World Bank as part of its annual Doing Business Report.

While Ireland has been ranked at sixth place in terms of 'protecting minority investors', India, Canada and Albania have jointly been placed at seventh position.

India's ranking in terms of investor protection stood much lower at 21st position last year. World Bank said that the rank has improved on account of various reforms launched in India over the past year.

Major countries ranked below India include France (17th), Korea and Italy (21st), the US (25th), Japan (35th), Germany (51st), Australia (71st) and Switzerland (78th).

India is ranked best among the BRICS nations, out of which South Africa is 17th, Brazil 35th and Russia at 100. China is much lower at 132nd place.

Protection of minority investors is one of the ten sub- rankings based on which the World Bank has prepared the overall 'ease of doing business' ranks for 189 countries, where India has been ranked 142nd.

"India strengthened minority investor protections by requiring greater disclosure of conflicts of interest by board members, increasing the remedies available in case of prejudicial related-party transactions and introducing additional safeguards for shareholders of privately held companies," the Bank said.

Many of these reforms have come in place following enactment of a new Companies Act, as also after amendments made by the securities market regulator Sebi for its norms applicable to all listed companies in the country and to various market entities.

"Globally, India stands at 7 in the ranking of 189 economies on the strength of minority investor protection index."

While the indicator does not measure all aspects related to the protection of minority investors, a higher ranking does indicate that an economy’s regulations offer stronger minority investor protections against self-dealing in the areas measured," the Bank said.

According to the report, economies with the strongest protections of minority investors from self-dealing require detailed disclosure and define clear duties for directors.

"They also have well functioning courts and up-to-date procedural rules that give minority shareholders the means to prove their case and obtain a judgement within a reasonable time," it said.

"As a result, reforms to strengthen minority investor protections may move ahead on different fronts—such as through new or amended company laws, securities regulations or civil procedure rules," it added.

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Source: PTI
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