Corporate India wants to do away with corporate governance legislation
By siliconindia   |   Wednesday, 30 April 2003, 19:30 IST
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NEW DELHI: Naresh Chandra, former Indian Ambassador to USA shared his thoughts on the state of corporate governance in India, and essence of the recommendations of the committee, on Wednesday at CII National Conference and Annual Session. He said Indian companies still have some ground to cover in terms of following corporate governance best practices in substance. He said that the committee had delved into topics ranging from defining the role of chartered accountants, quality of certified audited work, pinning down responsibility of financial information shared by company and many other issues concerning corporate governance. He further said that the committee was set up post Enron scandal in USA, and benefited from the Sarbanes-Oxley Act legislated in USA. He stressed that the committee observed that though primary responsibility of preparing accounts is with management, auditors could not be absolved of their responsibility. A recommendation by the committee to maintain supply of independent directors is through a ten-year term for independent directors, through three 3-year terms, and ensuring the composition of independent directors at 50 per cent of the board. The committee was also of the view that the 64,000 odd court cases against independent directors in India should be scrapped. Dr. Jamshed J Irani, Director Tata Sons, said that setting committees to look into aspects of corporate governance would not serve any purpose. He was of the view that corporate governance could not be legislated and that corporate governance is a mindset, which can be implemented only through belief of the board. He said that state of corporate governance in India was much better than the rest of world. He further said that Tata experience in terms of independent directors was very contrary to the recommendations of the various committees; the directors most useful to the company were the ones who had served the company for more than 20 years. Sucheta Dalal, columnist, came down heavily on the state of corporate governance in India and cited instances of insider trading by board members of Indian companies. She also said that Indian corporations have short changed investors in M&A acquisitions and indulging in vanishing act after primary market offers. She said that better disclosures were required in order to rekindle the primary market and investor interest. Being a member of the Narayana Murthy Committee on corporate governance set-up by SEBI, she explained the democratic process of selecting the recommendations, through majority scoring. Dr. Omkar Goswami, Chief Economist of CII, and a member of the Naresh Chandra and Narayana Murthy committees on corporate governance was of the view that as far as disclosures are concerned, India ranks among one of the top 10 countries in the world.

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