SEBI To Look At Information Sharing Among Company Board, Promoters
SEBI will look at information sharing between company boards and non-executive boards.
Market regulator Securities and Exchange Board of India will soon consider how much information the management and boards of listed companies can share with their non-executive promoters and whether independent directors need to play a more active role to ensure best corporate governance practices.
The proposed move assumes significance in the wake of bitter face-offs seen between some promoter groups and the top management personnel in case of Infosys and others.
Also Read: All You Need To Know About The Infosys Saga
A high-level panel, headed by noted banker Uday Kotak, is already looking into various aspects of corporate governance, while the regulator has been receiving several representations from various groups of domestic and foreign investors as also from other stakeholders such as proxy advisory firms following the Infosys crisis and earlier in the case of Tatas and others.
A top regulatory official said these issues are likely to be discussed in detail during SEBI's board meeting later this month, though any final guidelines would be framed only after putting up a draft for public consultation.
The proposed draft will deal with a number of corporate governance issues, including the systems required to be put in place for sharing of information between the management of listed companies and their promoters, including founders.
Several of these issues have come to fore in the backdrop of recent developments at Infosys where CEO Vishal Sikka abruptly resigned amid sharp differences coming into the public between the IT major's board and founders.
In the tussle, a bone of contention was about founders, including N R Narayana Murthy, alleging that adequate information was not provided by the then board with respect to certain deals of the company.
With effect from October, a detailed set of corporate governance norms are already coming in force for listed companies, requiring stricter disclosures and protection of investor rights, and also equitable treatment for minority and foreign shareholders.
These rules will require companies to get shareholders’ approval for related party transactions, establish whistle blower mechanism, elaborate disclosures on pay packages and have at least one woman director on their boards.
In June, SEBI had set up the committee under the chairmanship of Kotak to look at corporate governance standards at listed firms and come out with recommendations.
The panel included representatives of India Inc, stock exchanges, professional bodies, investor groups, chambers of commerce, law firms, academicians and research professionals, and SEBI.
The panel was to make recommendations to SEBI on ensuring independence in spirit of independent directors and their active participation in functioning of the company and steps for improving safeguards and disclosures pertaining to related party transactions.
Besides, the committee was to suggest measures for addressing issues faced by investors on voting and participation in general meetings and ways for improving effectiveness of board evaluation practices. It has also looked into issues pertaining to disclosure and transparency.
Separately, the regulator is looking afresh into complaints of alleged corporate governance-related lapses at Infosys.
SEBI had received several representations regarding the ongoing crisis, including about allegations and counter allegations from various sides. Some of these complaints came even before Infosys announced the resignation of its first non-founder CEO Vishal Sikka on August 18.
Earlier also, the regulator had looked into alleged corporate governance lapses following a whistle-blower's letter, presumably on Panaya deal and executive pay.