Good corporate governance vital for efficient functioning of pro-market policies: Jayant Sinha

New Delhi, Feb 9 (ANI): Jayant Sinha, Minister of State for Finance, today underlined the need for good governance practices in corporations in the pursuit of efficient functioning of the pro-market policies being unveiled by the government.

Addressing the International Conference on Corporate Governance, organised jointly by FICCI, the Indian Institute of Corporate affairs (IICA); and supported by the International Finance Corporation (IFC), Sinha said good corporate governance was essential for instilling confidence among investors in the Indian market as also to strengthen Indian corporations to be able to compete globally.

He said the introduction of the bankruptcy code in Parliament would have big impact on governance practices and “our effort is to balance the interests of the majority and minority shareholders as well as strengthening the rights of creditors.”

Prashant Saran, Wholetime Member, SEBI, in his keynote address, pointed out that corporate governance should be seen as a way of survival, of doing business, not merely as a means for earning larger returns. In this context, Saran said that a good measure to assess whether a company was doing well or not and the benefits to shareholders was to follow the principles of integrated reporting which took into account the returns from financial, manufactured, human, intellectual, social and natural capital.

Dr. Bhaskar Chatterjee, DG and CEO, IICA, said the international conference, the second in the series on corporate governance, was aimed at providing a unique opportunity to corporations to understand expectations of policy makers and discuss with them the impediments in implementing laws on the ground.

He emphasized that the way business is conducted in India by following good governance practices should become a benchmark for the rest of the world.

Harshavardhan Neotia, President, FICCI and Chairman, Ambuja Neotia Group, pointed out that though the knowledge test criteria for independent directors has been built in the Companies Act, it is important to ensure they are not hauled up as a routine measure, for no fault of theirs and especially for non-compliance of provisions beyond the Companies Act.

This could otherwise have a serious impact on directors where the intention is not of breach of trust or default and actions were honest. Such a situation can be remedied via a non-obstante clause insulating them from liability for acts committed where they were not explicitly involved. This is a great need for corporate India.

He said that the scope of non-compliances attracting imprisonment has been significantly increased compared to the Companies Act, 1956, mainly with a view to secure compliance. The current provisions provide for imprisonment of the officer in default even for technical non-compliances where there is no ‘willful’ default and also for areas involving interpretations. Penalties prescribed may need to be rationalized, so as not to deter persons from accepting non-executive directorship in companies.

Jun Zhang, Country Manager, India, IFC, said that the best run corporations are those that balance the business and societal interests in the communities in which they operate, adding that best governance practices were important for all companies, big or small.

IFC, he said, engages only with those companies which have strong corporate governance practices. He informed that IFC had joined with the Bombay Stock Exchange (BSE) to announce a Corporate Governance Scorecard with the objective of raising investor confidence, attracting capital and increasing the growth rate of the economy.

Professor Ashish Bhattacharya, Head, School of Corporate Governance and Public Policy, IICA, delivered a vote of thanks to the speakers and the participants at the conference.

The day-long conference deliberated on Navigating During Crisis; Global Best Practices on Corporate Governance; Corporate India: Diversity and Inclusivity and Managing Risks for Good Governance. (ANI)

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