Market regulator Sebi will soon come out with a detailed framework for the implementation of new corporate governance norms that pertain to protecting whistle-blowers, having orderly succession plans and keeping at least one woman director on company boards.
A circular with regard to detailed corporate governance norms for listed companies is in the process of being issued, official sources said.
The board of Securities and Exchange Board of India last month approved a proposal to amend the Listing Agreement with respect to these norms for listed companies.
The clearance follows months-long discussion among various stakeholders on draft regulations released last year.
The Sebi board was informed about the status of new norms at its meeting yesterday. They will take effect for all listed companies from October 1, 2014.
Every listed company will need to have at least one woman director on the board. Also, boards will have to adopt a policy on succession planning.
The companies would also need to adopt a whistle-blower policy for employees.
That apart, the norms seek to check all related party transactions with entities linked to promoters and directors.
Besides, the number of directorship a person can hold on company boards would be capped, along with various other measures to safeguard the interest of minority shareholders.
The norms also provide for greater oversight by minority shareholders and independent directors for checking any unjustifiable payments to related parties.
The new regulations seek to align the existing Sebi regulations with the new Companies Act and will soon be incorporated into the listing agreement for implementation.
Meanwhile, CNBC TV 18 quoted Sebi Chairman U K Sinha as saying that the area of corporate governance remains an issue in India and more work needs to be done to improve standards.
“Shareholders are increasingly becoming more active and corporate authority is being challenged,” he said in a conference organised by the International Bar Association.
He said public authorities, including regulators were facing ‘comprehensive evaluation’.
“Sebi is trying to follow the primary legal mandate of investor protection. Our enforcement actions are due to close scrutiny and feedback from stakeholders,” Sinha said, adding that more work was required in the field of surveillance.
[Press Trust of India]
