Upholding the contention, the SAT order stated that not allowing cross-examination of witnesses whose statements are being relied upon is a violation of principles of natural justice
Mumbai: In a set back to capital market regulator Securities and Exchange Board of India (SEBI), the Securities Appellate Tribunal (SAT) on Tuesday retained its order that allowed PriceWaterhouse (PW) to cross examine the audit firm’s members, who had acted as witnesses in the Satyam fraud case, to come out clean.
SAT had allowed PW to go ahead with the cross examination of its members, a move that was opposed by SEBI which filed the review petition with the tribunal, reports PTI.
SAT said, however, the market regulator could approach the Supreme Court in case it wants a review of the order.
“The points now sought to be raised in the review application may be taken in the appeals, if filed, in the Supreme Court. We find no ground to review our order dated 1 June 2011. Consequently, the application is rejected,” SAT said.
The members include Srinivas Talluri, CH Ravindranath, P Siva Prasad and N Ramu. In an order in December 2010, SEBI had rejected the plea of PW and others to cross examine them.
PW moved SAT against it.
Upholding the contention, the SAT order said, “We are of the view that there has been violation of principles of natural justice in not allowing cross-examination of the witnesses whose statements are being relied upon in the show-cause notice and also in not making available copies of the statements which have been relied upon by the board in issuing the show-cause notice.”
The order pertains to enquiry in the Satyam case, which came to light after the company’s founder B Ramalinga Raju admitted in January 2009 to fudging of books of accounts.
Satyam Computer was later taken over by Tech Mahindra and renamed as Mahindra Satyam.
The KPMG-CII report on corporate governance stressed on the true independence of directors and their role in developing an institution and a pool of personnel with diverse skill and improving corporate governance as also take concrete measures to improve their functioning
Mumbai: There is a need for an objective debate within corporate India to make independent directors more effective and truly independent, reports PTI.
“It is important to address the challenges like the true independence (of independent directors), and their role in developing an institution and a pool of personnel with diverse skill sets who can provide exemplary board services and improve corporate governance as also take concrete measures to improve their functioning through a combination of orientation and adequate remuneration,” a KPMG-CII report said.
The report on ‘Corporate governance: Value beyond compliance’, was released by corporate affairs minister Veerappa Moily here today.
Calling for better accountability, the report said, “There is substantial room for improvement in enhancing accountability of the board members.”
It added, “Within many board rooms, the topic of CEO succession is not often discussed. CEO succession planning calls for wider debate and rigorous processes than the ones currently followed, especially in owner-managed businesses.”
The report further said there is a gap between corporate governance standards in the public sector and the private sector.
“PSUs are subjected to varying levels of government interference in their routine functioning, undermining their autonomy,” it said.
“Restrictive and outdated labour laws make laying off employees and closing down businesses difficult. In FY10-11, about a third of the 249 PSUs collectively reported a loss of $3.4 billon,” the report adds.
Noting that investor activism, particularly by institutional investors, has increased after the recent financial crisis, the report stated, “Greater investor scrutiny could bring about substantial improvement in corporate governance. This is an important area where corporate India needs to catch up with the developed world.”
IRDA has put out mediclaim portability guidelines that could be tough on insurance companies with time limits for handling the portability proposal; policyholders may also lose benefits
The Insurance Regulatory and Development Authority (IRDA) has finally issued new guidelines for the 1 October 2011 implementation of health insurance portability. Even though these address some of the issues, there are several conditions that will make portability fall through the cracks. So, will insurance companies be able to meet the tough time limits for handling portability proposals?
According to Subrahmanyam B, vice-president, health and PA, Bharti AXA General Insurance, "The guidelines are comprehensive and cover only non-life insurance. The policyholder has to initiate the process for portability 45 days before it is due for renewal, by filling a proposal form with the new insurer and the portability request form. The new insurer will then have to write to the policyholder's earlier insurer within seven days. The old insurer has to provide the policyholder's medical and claims history to the new insurer within seven days thereafter.
We learn that IRDA intends to create a website (already under testing) on which the previous insurer would have to upload the policyholder's data. If the new insurer does not respond to a request within 15 days of it being made, it will be deemed as accepted.
Insurance companies have an escape route by way of the premium loading and the right to underwrite. According to one senior industry executive, "In view of the waivers offered on pre-existing diseases (PED), insurers need to have flexibility on loadings and IRDA should clear such filing requests for loadings within a fixed time frame of 30 days." Clearly, loading will be the ultimate tool that will be used to dissuade a 'bad' pool of policyholders to migrate to a new insurance company.
The other issue is no-claim bonus (NCB) where the net effect may deplete the bonus. The new insurer can port the sum insured (SI) on an existing policy inclusive of the NCB that has accrued on it. However, the premium charged will be on the higher sum which is inclusive of the bonus. This effectively erodes the effect of the NCB itself. For instance, if a policyholder has an insurance of Rs2 lakh, which has increased to Rs2.5 lakh due to the NCB, that is the sum that will be transferred to the new insurer. However, the premium charged by the new insurer will be on Rs2.5 lakh. Consequently, the net effect is that the policyholder loses the true benefit of NCB.
Interestingly, Segar Sampathkumar, deputy general manager, New India Assurance, had anticipated this. Earlier this year, he told Moneylife, "A no-claim bonus cannot be portable, as it is earned due to a relation with the insurer."
IRDA has also failed to address another major issue, that is, the medical conditions developed by the policyholder with the old insurer. For instance, a policyholder has no pre-existing diseases (PED) when the initial policy was taken, but has developed conditions over the next couple of years. If the policyholder wishes to port to a new insurer who has a standard four-year PED waiting period, the new insurer will make the policyholder wait for a couple of years to cover these conditions. These are considered PED with the new insurer even though they consider the time spent with the old insurer. In this case the policyholder would be better off with the old insurer as there is no PED and hence all the conditions are covered with no waiting period.
The guidelines address group to retail (individual) policy porting. It also allows porting to a retail policy of the same insurer in the first step. After a one-year wait, the policyholder can port to another insurer. It's a two-step process that will be far from easy.