- SEBI Chairman U.K.Sinha compared state regulation in India to that in developed markets. He did so as he was provoked by an industrialist who spoke earlier about dealing with multiple regulators and excessive regulation which led to diverting focuses of companies from the business
- He said that the rules were more stringent in other countries.
- He opined that investment would shift abroad if regulations turned excessive (threat to corporate sector)
- Cairn India opened up its overflowing coffers to an unnamed group company with a $1.25-billion loan on generous terms owing to which its shares tanked at the stock market. The Vedanta group Co.(Cairn India) had not shared this transactions information to neither its related shareholders nor SEBI (it being a material transaction).
- Under the new clause 49 will be effective from October 1, this would be counted as violation as they have to seek shareholders permission for related party transactions.
- Four independent directors, retired IAS officer and former Cabinet Secretary Naresh Chandra; well-known economist Omkar Goswami, former CEO (Asia Pacific) of HSBC; Aman Mehta; and Edward T. Story, founder of SOCO International Plc, a LSE listed company are Cairn Board trump cards.
- Audit committee with independent directors had cleared the loan. They neither informed SEBI nor the non-promoters (40%) who deserve to be informed.
- Cairn episode is just an example of the corporate malgovernance & justifies strict SEBI regulations.
- With India emerging as a market for share holders the need for a better governance is necessary.
- We are entering an era of shareholder activism seen through the Tata Motors episode where shareholders vetoed a proposal to pay a higher remuneration to 3 top executives.
- Electronic Voting has ensured greater shareholder participation in Co. meetings & resolutions.
- Cos like Institutional Investor Advisory Services, founded by Anil Singhvi, InGovern and Stakeholder Empowerment Services blow the whistle whenever there is any shareholder unfriendly practice.
- Prevention is always better than cure, compliance should be top priority, else, Cos risk regulatory penalties, bad publicity & de rating of their stocks.
- Read at: http://www.thehindu.com/todays-paper/tp-business/corporate-governance-blues/article6255541.ece