NEW DELHI: Rejecting the idea of assuming a Central Vigilance Commission (CVC)-like role of anti-corruption watchdog for the private sector, capital market regulator Sebi has said it wants listed entities to follow a nine-point disclosure norm against non-ethical business practices instead.
The Securities and Exchange Board of India (Sebi), which regulates thousands of listed companies as well as hundreds of other market entities like brokers, merchant banks and ratings agencies, has informed its board that it cannot adopt a private sector role similar to that of the Central Vigilance Commission (CVC) for government entities.
In a memorandum submitted to its board at its last meeting on November 24, Sebi said a CVC-like role “is not within the mandate of Sebi under the existing legal framework”.
At the same board meeting, Sebi approved a new disclosure-based regime for listed companies with respect to non-ethical business practices.
As per the decision, companies would need to submit a ‘Business Responsibility Report’, along with their annual reports, to help assess the fulfillment of their environmental, social and the corporate governance responsibilities.
These disclosures, which Sebi has proposed to be based on nine key principles of responsible, transparent and ethical business practices, would initially apply to the top 100 companies.
Regarding the adoption of a CVC-like role in respect of activities of private sector companies, Sebi said its jurisdiction extends to listed companies in the private sector on certain matters delegated under the Companies Act.
“Further, Sebi has been established to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market as enshrined in the Sebi Act,” the regulator told its board.
The matter came up for discussion in the backdrop of a proposal to Sebi by Transparency International, a global civil society organisation working against corruption, for exploring the possibility of Sebi performing a CVC-like role with respect to the activities of private companies.
The CVC was set up by the government with a mandate to inquire into offences alleged to have been committed under the Prevention of Corruption Act by certain categories of central government employees, corporations established by or under any Central Act, government companies and other entities owned and controlled by the central government.
Sebi said that Transparency International India (TII) was also working toward eradication of corruption by “bringing together relevant players from government, civil society, business and the media to promote transparency in elections, in public administration, in procurement and in business.”
(Press Trust of India / New Delhi December 18, 2011)