Stressing on the need for Indian corporates to match up with the world in corporate governance standards, Mr U K Sinha, Chairman, Securities & Exchange Board of India (SEBI) has reasserted its importance for all corporations for the coming years. “It is important to note what is happening in the world futuristically. There are a whole new set of areas where the world is moving. All corporations, who want to stay relevant at the global level have to become relevant in that regard. I would urge you not to regard corporate governance as being thrust upon you but to look at it as something that is important for you own long term survival,” he said. Mr Sinha was addressing the 10th Corporate Governance Summit organized by Confederation of Indian Industry (CII) on the overall theme titled ‘Building a Strong Corporate Governance Ecosystem in India’.
Highlighting global governance trends, Mr. Sinha spoke about the new OECD principles that have been revised recently. He cited focus on equitable right of all shareholders with everyone being given an effective redressal mechanism; monitoring of the effectiveness of management; accountability of Boards to all stakeholders; and identification and mitigation of risk factors by the Board.
Drawing attention to the need for governance improvements, he highlighted how in the World Bank report of Ease of Doing Business, India has even beaten the USA to climb from number 49 in 2012 to being 8 this year on the parameter of shareholder protection. He stressed on the need for further improvement while talking about parameters like conflict of interests in boards; CEO’s chairing the board etc which companies need to focus on.
Setting the tone for the future, he called on companies to note world developments futuristically and emphasized important areas like indirect impact reporting on impact in society; integrated reporting which is trying to capture sustainability etc saying these were central to long term corporate survival. He also talked about SEBI’s role in bringing about change in a non-disruptive manner.
Delivering the Multilateral Partner Outlook, Ms Vladislava Ryabota, Regional Corporate Governance Lead, South Asia, IFC spoke about the emphasis on internal control, board oversight, independent directors etc brought about in India by the new Companies Act and SEBI Regulations raising the bar for Indian companies significantly. She opined how the board’s true desire to conform, improve and perform in line with global best practices is the driver of governance. Asserting effective implementation of best practices, she deliberated how this is a universal challenge. She also spoke about the importance of following best practices not just by the letter of law but also spirit; need for independent directors to add value by providing strategic guidance; importance of gender diversity for different perspectives.
She announced that CII and IFC have entered into a ‘Cooperation Agreement’ to promote good corporate governance practices in the country and in the development and implementation of initiatives towards “Independent Directors” and “Women on Board” programs.
Mr. U K Sinha released a CII Deloitte publication titled ‘Global Trends in Corporate Governance’. Talking about the report and the trends in Corporate Governance in the country, Mr. P R Ramesh, Chairman, Deloitte India acknowledged the regulatory efforts in India for the very high maturity levels of corporate governance – thanks to SEBI and developments in the Companies Act. He stressed the need for moving away from compliance to effectiveness for the need for building a strong ecosystem of Corporate Governance. He said it is not about board structures, charters, roles of responsibilities as such as it is about ensuring that boards effectively discharge their duties.
Mr Ramesh enumerated 11 top elements which Boards need to focus on in the coming couple of years. These include stakeholder democracy, independence, accountability, Board diversity, risk management, strategy and value-creation etc. Mapping world developments and trends, he spoke about making independent directors truly independent by removing shackles like availability of time and conflict of interest; gender diversity; and illustrative framework for evaluation of boards.
Mr. Leo Puri, Chairman, Managing Director, UTI Asset Management Co. Ltd., earlier set the tone for the Summit. He commended SEBI’s efforts while discussing how there is a need to maintain the balance between voluntary adoption of corporate governance boosted by mandatory regulations to keep with the rest of the world.
The day long Summit is the flagship event of CII in the governance domain. Various sessions deliberated upon through the day included Governance Strategy: Global Standards and changing regulatory scenario; Women on Board: Connecting Corporate Performance and Gender Diversity; Board Evaluation: Helping Board improve its own performance; experience sharing; Internal Control & Fraud Prevention: Role of the Board.