Corporate governance must earn the trust of the people, says SEBI CGM

Explaining the concept of corporate governance in a unique manner, the CGM cited an example of the functioning of a business with the functioning of the joint family.

According to him the role of the head of both the family as well as the business is crucial for the sustenance of the family and business respectively. 

“If the head of the corporate conducts the business which is healthy, take the business for a long time to survive, then there will be no problem. But unfortunately this does not happen,” he said.

Sundaresan, therefore, in the conference laid down few principles on corporate governance. These include corporate framework, consideration of all stakeholders, responsibilities of the board, disclosure and transparency, role of stakeholders in corporate governance, equitable treatment of stakeholders, rights of shareholders.

But he insisted that only laying down the principles and not following it would lead to the catastrophe of the governance and the business like it had happened with Satyam company.

He further said that to develop corporate governance, certain steps must be taken like practicing e-voting, restrictions on directorships, inclusion of diversity and to have a succession planning. However he believes that the director must function as a leader, entrepreneur, adviser, watchdog and also a risk manager.

Atanu Sen, Chairman of Indian Chamber of Commerce National Expert Committee on Banking, Finance and Insurance welcomed the recommendations and the changes brought by SEBI towards the corporate governance. He welcomes the recommendation of bringing woman director thus bringing diversity. He also believes that the evolution of code of conduct would lead to a better management.

“Corporate governance is implicit to the efficient functioning of the company's management and it should encompass the provisions of board and management as well as to perceive the objectives as to the best interest of the company and its shareholders,” said Sen.

Anirban Datta, Chairman, EIRC, The Institute of Chartered Accountants of India spoke about the study they conducted  over number of companies to check whether they were maintaining good governance or not. 

He said: “We did a study of how many companies are maintaining good governance and found that five hundred of them are doing good including the PSUs.”

He also said that for a corporate governance there must be adequate and timely intervention in the functioning, equitable treatment, disclosure and transparency in the business.

Dr. Asish Bhattacharyya, member of Core Group of Experts, National Foundation for Corporate Governance (NFCG) said: “Corporate governance is about protecting the interest of shareholders.”

“Corporate governance is about designing institutions to induce or compel the management of companies to be sensitive to the interest of shareholders and other stakeholders,” added Bhattacharyya.

According to him, if a board of directors has to influence the management then the directors have to be independent. However it failed because of lack of motivation and lesser allotment of time to the functions.

Throwing light on family business he said that in a family business, family governance overrides corporate governance as “family governance paramount.”

(Reporting by Souvik Ghosh)