Indian financial regulator sets up corporate governance committee

9 June 2017

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The Indian financial regulator, the Securities and Exchange Board of India (SEBI) has set up a committee to advise on issues relating to the corporate governance of listed companies. SEBI wants the committee to recommend improvements within the next four months.

Specifically SEBI is asking the committee to make recommendations on:

1.Ensuring independence in spirit of Independent Directors and their active participation in functioning of the company;

2. Improving safeguards and disclosures pertaining to Related Party Transactions;

3. Issues in accounting and auditing practices by listed companies;

4. Improving effectiveness of Board Evaluation practices;

5. Addressing issues faced by investors on voting and participation in general meetings;

6. Disclosure and transparency related issues;

7. Any other matter, as the Committee deems fit pertaining to corporate governance in India.

The committee will be chaired by Shri Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank. SEBI said the other members of the committee are the representatives of Corporate India, stock exchanges, professional bodies, Investor groups, Chambers of commerce, law firms, academicians and research professionals and SEBI.

SEBI has led the development of improved corporate governance in India with previous committees being chaired by Shri N R Narayana Murthy and reporting in 2003  and prior to that the Kumar Mangalam Birla Committee which produced its report in 1999. The recommendations from these committees are enforced through  Clause 49 of the Listing Agreement for public companies in India.

Other corporate governance improvements in India have been developed by its government. According to an Insight report by Deloitte in 2002, India's Ministry of Finance appointed the Naresh Chandra Committee to examine various corporate governance issues primarily around auditor – company relationship, rotation of auditors and defining Independent directors. More recently more corporate governance changes were enacted through the  Companies Act, 2013 which also prompted further changes to clause 49.

Meanwhile earlier this year the Insurance Regulatory and Development Authority of India published a stewardship code for insurers in their role as institutional investors managing funds on behalf of policyholders.

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