According to the SEBI chief out of the listed companies, more than 1,100 are non-compliant of Clause 40A of the Listing Agreement and over 900 entities do not adhere to Clause 49
Market regulator Securities and Exchange Board of India (SEBI) will soon come out with a new code on corporate governance based on consultative paper, says a top official.
UK Sinha, chairman of SEBI said, new set of corporate governance guidelines for listed companies are being finalised and are expected to be announced shortly.
“For listed companies, I will like to tell you, we are going to do something over and above what is specially mentioned in the Companies Act, in the interest of corporate governance of large corporates,” he said.
Formulation of new set of rules for listed companies will be done in consultation with all stakeholders, Sinha said at a corporate governance summit organised by industry body CII.
“We have already placed our document for consultation. Our consultation is almost over. So, we are now going to promulgate our rules very soon.”
Sinha said out of the listed companies, more than 1,100 are non-compliant of Clause 40A of the Listing Agreement and over 900 entities do not adhere to Clause 49. Enforcement action against such companies is justified, he added.
Clause 40A of the agreement deals with minimum level of public shareholding, while Clause 49 deals with corporate governance, with a focus on the constitution of the board and top management.
“My request to all of you (corporates) is to help SEBI to ensure that we reach a level that is much higher and which is in keeping with the best in the world,” he said.
The SEBI chief assured that the regulator will not veer off from the spirit of Companies Act in formulating the norms.
Sinha said there is a need to align ‘our’ rules with the best in the world as there are many corporates already working outside India in a multi-national environment or have aspirations to do so.
“Now, we don’t only have the problems of foreign guidelines and standards, also we have to deal with extra-territoriality of foreign laws, we have to cope with them.”
Sinha asked companies to show real commitment towards corporate social responsibility (CSR). “The commitment to CSR has to be built as a culture in the organisation.”
A joint CII- Deloitte publication titled 'Global Trends in Corporate Governance - since the financial crisis' was released by Sinha at the summit. The paper gives an overview not only of the national trends but also global trends in corporate governance.