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excellence-12 · 15 days ago

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Issues in Corporate Governance practices in India that went unaddressed in 2023

There has been considerable improvement in the corporate governance standards in India. Some aspects of corporate governance that need improvement in 2024, keeping the letter and the spirit of law in mind, are:

Quality of disclosures – India follows a disclosure-based regime. Both the Companies Act, 2013 and SEBI LODR Regulations, 2015 lay emphasis on disclosures to stakeholders. For a disclosure-based regime to be successful, such disclosures should be timely, complete and correct. While many companies go through the motion of disclosing, the quality of such disclosures needs significant improvement. This also holds true in the case of explanatory statements, sent to shareholders for general meetings. Such statements sometimes do not contain essential details.

Transparency– There should be transparency between a company and its investors. However, a number of companies choose to not be transparent about their affairs.

Avoidance of conflict of interest – SEBI LODR Regulations, 2015 state that instances of conflict of interest of Directors and senior management must be identified and managed. Conflict of interest arises when a person chooses personal interest over that of the company. Some individuals however choose not to disclose such instances, and companies do not identify such instances proactively.

Separation of posts of Chairperson and Managing Director – SEBI LODR Regulations, 2015 states that separation is of the two posts is desirable for promoting corporate governance. There was a proposal to make this mandatory, but that did not get implemented. Chairperson is the Chair of the Board, and Managing Director is head of management. The Board has to hold the management accountable. For this to be meaningful, the same person should not hold both the positions.

Understanding the difference between ownership and management – When ownership and management reside in the same set of individuals or entities, distinguishing between the two can be difficult. For a company to be effectively run, it is important that this difference is understood and captured in the structure.

Board composition – Some sectors, such as the public sector, have been grappling with the problem of inadequate Independent Directors on the Boards of companies. This makes their Boards structurally and functionally sub-optimal.

Gender diversity on Boards – Having only one woman Independent Director, in the name of gender diversity, is wholly inadequate. Boards and senior managements should actively focus on getting more women to be Board members.

Age Diversity – While some younger Independent Directors have been appointed on Boards, this number is small. With advancements in technology, and with more new age companies being listed, it is important to consider the appointment of younger Directors on Boards. This would also bring fresh thinking in boardroom discussions.

Board committee functioning – A lot of important items are dealt with by committees of the Board. It is therefore important that committees are properly composed, and with proper terms of reference. Adequate time should be given to the meetings of the committees, and there should be updates given by committee Chairpersons to the Board, post the meetings.

Risk management – Post demonetisation and Covid, a number of companies have understood the importance of proactively identifying risks. What is also important is to continually update risks that the company can encounter. Efforts to identify and mitigate or manage risks have to be continuous.

Benchmarking of remuneration– It is important to compensate senior management properly and adequately. Remuneration should be a mix of fixed and variable pay. ESOPs too should form a part of the total compensation. Some companies however do not consider industry benchmarking while deciding on compensation standards. Further, not having a component of variable pay or not having ESOPs often result in senior management not being invested in the long-term performance of the company.

Succession Planning – Every company should have in place a robust process for succession planning, both for the Board as also for key positions. This is the role of the Nomination and Remuneration Committee, and in turn of the Board. Unfortunately, many companies pay lip service to this. 2024 would see a large number of changes in Independent Directors since two terms of 5 years each would come to an end for many of them. Very few companies proactively onboarded new Independent Directors, to enable continuity with change. Source: https://excellenceenablers.com/issues-in-corporate-governance-practices-in-india-that-went-unaddressed-in-2023/

#corporatestrategy #corporategovernance #accountability #governanceaudit #boardroom

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vedantbhoomidigital · 2 months ago

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'Madhabi Butch scam' not just insider trading, a case of direct conflict of interest: Rahul Gandhi

Leader of Opposition in Lok Sabha Rahul Gandhi on Friday intensified his attack on market regulator SEBI Chairperson Madhabi Puri Buch, alleging that a “gang of corporate giants” is hollowing out India's economic structure from within. Along with this, he said that those who are responsible for protecting the interests of the country (…

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tfgadgets · 3 months ago

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BJP protecting SEBI chairperson Madhabi Puri Buch from answering to PAC: Congress

This picture made from the video posted by the Congress shows SEBI chairperson Madhabi Puri Buch and the market regulator’s logo. Photo: X/@INCIndia The Congress on Saturday (October 26, 2024) accused the BJP of insulating Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch from answering to the Parliament’s Public Accounts Committee (PAC) on the performance of the…

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jasminewilson143 · 3 months ago

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Parliamentary Panel Summons SEBI Chief and Officials Amid Allegations of Conflict of Interest

Parliamentary Panel Summons SEBI Chief and Officials Amid Allegations of Conflict of Interest The Public Accounts Committee (PAC) of the Indian Parliament has issued a summons to the chairperson of the Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, and top officials from other key government departments. The officials, including representatives from the Department of Economic…

#Adani Group #Conflict of Interest #Hindenburg Research #Indian Parliament #Madhabi Puri Buch #Parliamentary Panel Summons SEBI #Public Accounts Committee (PAC)#Regulatory Oversight #SEBI

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odnewsin · 3 months ago

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SEBI Chief Madhabi Buch skips PAC meeting, BJP moves speaker over chair Venugopal’s conduct

New Delhi: SEBI chairperson Madhabi Puri Buch skipped a Parliament’s Public Accounts Committee meeting Thursday, prompting panel head KC Venugopal to postpone the sitting, with NDA members accusing him of making unilateral decisions and lodging a protest with the Lok Sabha speaker. Venugopal told reporters that the committee received a communication from Buch at 9.30 am that she and her team…

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forblogmostly · 3 months ago

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Key Outcomes from PC Jeweller Limited's Board Meeting on September 30, 2024

On September 30, 2024, PC Jeweller Limited held a Board of Directors meeting to discuss and approve several significant decisions that will shape the company's future course. The meeting, held in compliance with Regulation 30 of SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, addressed key financial and organizational changes for the company. Here is an overview of the most important resolutions taken during the session.

The Board approved the allotment of 11.5 crore Fully Convertible Warrants (FCWs) to the company's promoter group. This move followed shareholder approval granted during the Extraordinary General Meeting held on August 8, 2024, and the receipt of 'In-Principle Approvals' from both BSE Limited and the National Stock Exchange of India. These FCWs were issued at a price of ₹56.20 per warrant, adhering to Chapter V of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

These FCWs were allotted on a preferential basis to two entities within the promoter group, including New Track Garments Private Limited and Balram Garg (HUF). New Track Garments received 8 crore FCWs, while Balram Garg (HUF) was allotted 3.5 crore FCWs. The subscribers have already paid 25% of the issue price, and each warrant will convert into an equity share worth ₹10 upon the payment of the remaining 75%, with the conversion expected to take place within 18 months.

The Board also considered and approved the sub-division of its equity shares, commonly referred to as a stock split. The proposal entails dividing each ₹10 face-value share into ten shares of ₹1 face value each. The rationale behind the move is to improve liquidity and make PC Jeweller’s shares more affordable to a broader base of retail investors. The stock split is subject to shareholder approval, which will be sought through a postal ballot. Once the sub-division is approved, the company will announce a record date, and the entire process is expected to be completed within 45 days.

The company's leadership also saw a reshuffle, with three new appointments to the Board of Directors. Shri Mahesh Agarwal, a seasoned Chartered Accountant with over 35 years of experience in banking, project financing, and audit processes, has been appointed as an Independent Director for five consecutive years. Similarly, Shri Farangi Lal Kansal, a civil engineering expert and a Gold Medalist in Public Health, has been appointed as an Independent Director for a term of three years. Lastly, Shri Vishan Deo, who has been associated with the company since 2011, was appointed as an Additional and Whole-time Director for a three-year term. Shri Deo also assumed the role of Executive Director (Finance) and Chief Financial Officer, taking over from Shri Sanjeev Bhatia, who opted for voluntary retirement effective September 30, 2024.

Shri Bhatia, who served PC Jeweller Limited as its Chief Financial Officer for 16 years, decided to retire after reaching the age of 62. His contribution to the company's growth, especially through challenging legal times, has been recognized as significant, and the Board acknowledged his voluntary resignation. In light of his retirement, Shri Vishan Deo, in addition to his appointment as Whole-time Director, will assume the position of CFO from October 1, 2024.

The Board also announced changes to its committees. The Audit Committee and the Nomination and Remuneration Committee were reconstituted, with Smt. Sannovanda Machaiah Swathi appointed as Chairperson of the Audit Committee and Independent Director, Shri Mahesh Agarwal, inducted as a member. The Nomination and Remuneration Committee saw the induction of Shri Mahesh Agarwal and Shri Farangi Lal Kansal as members, with Smt. Sannovanda Machaiah Swathi designated as Chairperson.

The meeting, which commenced at 8:00 PM, concluded at 9:15 PM, covering a wide range of financial, managerial, and structural developments that will have a lasting impact on PC Jeweller Limited's future operations. These changes signal the company's strategic efforts to boost investor confidence, improve shareholder value, and enhance its corporate governance.

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biznewsconnectseo · 3 months ago

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#biznewsconnect #news #breaking news #mumbai #1950s #mumbai news #b n kumar

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rightnewshindi · 5 months ago

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SEBI Chairperson Madhuri Puri Buch; सेबी की चेयरपर्सन माधबी पुरी बुच ने तोड़े नियम? सामने आई नई रिपोर्ट

SEBI Chairperson Madhabi Puri Buch: कंसल्टेंसी फर्म से आय के मामले में सेबी की चेयरपर्सन माधबी पुरी बुच फिर से सवालों के घेरे में आ गई हैं. रॉयटर्स ने अपनी एक रिपोर्ट में लिखा है कि पब्लिक डॉक्यूमेंट्स को देखने पर पता चला है कि मार्केट रेग्युलेटर की प्रमुख को अपने 7 साल के कार्यकाल के दौरान कंसल्टेंसी फर्म से आय हो रही थी, जो कि नियमों का संभावित उल्लंघन है. हाल ही में हिंडनबर्ग की एक रिपोर्ट…

#break rules #Madhabi Puri Buch #New report #SEBI Chairperson #SEBI Chairperson Madhuri Puri Buch

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timelessnewsnow · 4 months ago

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According to the first statement, SEBI staff members were being deceived by external parties in an effort to damage the organization’s reputation. This declaration was made in response to an internal letter from SEBI employees that demanded that SEBI Chairperson Madhabi Puri Buch quit and attacked the work environment.

Know more 👆🏻🌐

#sebi #treading #adani #Madhabi Puri Buch

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excellence-12 · 25 days ago

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Explore Insights from Gatekeepers of Governance 2024

Gatekeepers of Governance 2024, the 9th Annual 2 day Corporate Governance Summit, was held on November 21-22, 2024 at the Trident Hotel, Bandra Kurla Complex, Mumbai. It brought together leaders to address challenges and opportunities in the area of corporate governance. Organized by Excellence Enablers Private Limited, this prestigious event served as a platform to exchange ideas and solutions for fostering robust corporate governance practices. The discussions during the Summit focused on key themes and topics, as outlined below.

The Summit opened with an inaugural session titled “Regulators – Friends, Foes, or Frenemies?” featuring eminent speakers such as Mr. M. Damodaran (Chairperson, Excellence Enablers, Former Chairman, SEBI, UTI and IDBI), Justice P. S. Dinesh Kumar (Presiding Officer, Securities Appellate Tribunal; Former Chief Justice, Karnataka High Court), Mr. M. Nagaraju (Secretary, Department of Financial Services, Ministry of Finance, GOI), Mr. K. Rajaraman (Chairperson, IFSCA; Former Secretary, GOI), and Mr. Ashwani Bhatia (Whole Time Member, SEBI). The discussion was on the relationship between Regulators and businesses, highlighting the dual role that Regulators play in easing business processes, while ensuring compliance. Regulators act as allies by creating fair and transparent frameworks, but are often seen as adversaries due to the perceived burden of compliance costs and stringent norms.

Ultimately, the key to a healthy relationship between Regulators and businesses lies in striking a balance. Regulators must be flexible and adaptive, understanding the challenges and needs of the regulated universe. On the other hand, businesses should engage constructively with Regulators, providing feedback and collaborating on solutions that meet regulatory goals without limiting innovation.

SMEll Tests in Governance

The panel included Mr. Nilesh Shah (MD, Kotak Mahindra AMC) and Mr. S. Ramann (Deputy Comptroller and Audit General of India; Former CMD, SIDBI; Former MD & CEO, NESL). It delved into the governance challenges faced by SMEs, where disparities in compliance and governance standards are evident. The key takeaways were that governance quality depends on mindset, not size. Regulators should focus on non-compliant entities, thereby allowing compliant SMEs to thrive, while improving overall governance.

Boards – Have They Failed Stakeholders?

Experts like Mr. Mukesh Butani (Founder & Managing Partner, BMR Legal Advocates; Member, Global Supervisory Board, International Fiscal Association), Ms. Pallavi Shroff (Managing Partner, Shardul Amarchand Mangaldas & Co.) and Mr. M. Damodaran discussed whether Boards have adequately protected stakeholder interests. The discussion focused on the gap between rising expectations and board performance. Boards must act decisively on whistleblower complaints, executive resignations, and other red flags. Effective succession planning, equitable committee workloads, and a focus on stakeholder interests, not just shareholders interest, are critical to meeting their increasing responsibilities.

ESG – Do Good Opportunity or Feel Good Scam?

Panellists Mr. D.P. Singh (Deputy MD & Joint CEO, SBI Funds), Dr. Mukund Rajan (Chairperson, ECube Investment Advisors; Former Chief Ethics Officer & Brand Custodian, Tata Group), and Mr. Vikram Singh Mehta (Distinguished Fellow, Centre for Social and Economic Progress; Former Chairperson, Brookings India; Former CEO, Shell India) addressed the issues in the ESG space. They raised the question whether it drives meaningful change or is merely a tick-box exercise. ESG should be more than just following rules on paper—it needs to create real value by promoting sustainable and responsible business practices. Big companies can handle ESG costs more easily, but for smaller businesses, it can be a strain. So we need to see if it is making a real difference. The related point was while E, S and G were desirable pursuits, clubbing them as ESG did not seem appropriate.

Do Managements Also Run Business?

With perspectives from leaders like Mr. M. Damodaran, Mr. Amish Mehta (MD & CEO, CRISIL) and Mr. Tapan Singhel (MD & CEO, Bajaj Allianz General Insurance Company, GIC), the session delved into whether the heavy compliance burden has diverted managements from their core responsibility i.e. running business. Boards must prioritize strategic discussions, while not ignoring compliance matters in meetings, enabling management to focus on operations. Effective corporate governance should complement, not substitute strategic leadership.

Do Auditors Need Auditing?

With insights from Mr. D. Sundaram (Vice Chairperson & MD, TVS Capital Funds; Former Vice Chairperson, HUL), Mr. Jamil Khatri (Co-Founder & CEO, Uniqus Consultech; Former Head of Audit, KPMG) and Mr. P.R. Ramesh (Former Chairperson, Deloitte India), this discussion explored the growing regulatory scrutiny of auditors, and discussed maintaining their independence and effectiveness. While regulation enhances accountability, care must be taken to avoid excessive prescriptions that might negatively impact audit quality.

Auditing requires oversight due to recent failures and regulatory scrutiny. Self-regulation often falls short, on account of conflict of interests, thus undermining audit quality. Regulatory oversight is crucial for accountability, but Regulators should also play a developmental role, understanding real-world changes and challenges. Successful audits depend on cooperation from all stakeholders, especially management, to ensure the existence of effective controls.

Is Compliance Good Business?

The second day began with a plenary session featuring Mr. M. Damodaran, Mr. Ananth Narayan G. (Whole Time Member, SEBI) and Mr. Ashishkumar Chauhan (MD & CEO, NSE). This plenary session emphasized that compliance is not just about following rules, but embedding integrity and governance into a company’s core. The African proverb, “If you want to walk fast, walk alone; if you want to go far, walk together,” suitably captures the essence of compliance fostering trust, resilience, and long-term value creation.

Compensation – How Much is Too Much?

The session led by Mr. Ajay Bahl (Co-founder & Managing Partner, AZB & Partners), Mr. Sanjeev Aga (Former MD, Aditya Birla Nuvo; Former MD, Idea Cellular) and Mr. Sunil Mehta (Chairperson, IndusInd Bank; CMD, SPM Capital Advisers) examined the balance between fair remuneration and shareholder expectations.

Balancing shareholders’ concerns about excessive compensation with the need for adequate incentives requires a thoughtful approach. Compensation should reflect the market, the company’s size and risk level, and the individual’s responsibility and contribution. The worth of compensation should be tied to the risk, responsibility, and time spent on the role, ensuring it is a fair reward for the value and risks taken on, especially in high-responsibility roles like the Audit Committee for example.

Chairpersons – Biting More Than They Should Chew?

The session featured Mr. Homi R Khusrokhan (Former MD, Tata Chemicals & Tata Tea), Mr. Nawshir Mirza (Former Senior Partner, S. R. Batliboi & Co.) and Mr. M. Damodaran. It discussed whether the hyperactive involvement of some Chairpersons in Boards is affecting the management’s ability to operate efficiently. This raises important questions: Are non-executive Chairpersons overstepping into areas meant for management? How can we define and maintain clear boundaries?

The role of a Chairperson is to facilitate balanced decision-making, not to intrude on management’s operational domain. A good Chairperson fosters collaboration, values diverse perspectives, and ensures all voices are heard, speaking last in order to encourage open dialogue. As the boardroom has shifted focus from shareholder value to stakeholder value, Chairpersons must act as “first among equals,” balancing efficiency with inclusivity, and maintaining clear boundaries between governance and management.

Conclusion

Gatekeepers of Governance 2024 concluded with a call for ongoing improvement in corporate governance practices, to avoid failures and encourage long-term growth. By bringing together different stakeholders, the Summit highlighted ways to improve governance practices, stressing the importance of working together and being flexible to build a stronger and more resilient corporate ecosystem.

You can view the sessions through the following link:

SMEll Tests in Governance

Boards – Have They Failed Stakeholders?

ESG – Do Good Opportunity or Feel Good Scam?

Do Managements Also Run Business?

Do Auditors Need Auditing?

Is Compliance Good Business?

Compensation – How Much is Too Much?

Chairpersons – Biting More Than They Should Chew?

Conclusion

You can view the sessions through the following link:

#CorporateGovernance #Leadership #BusinessEthics #ExcellenceEnablers

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businessviewpointmag · 24 days ago

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Rahul Gandhi Calls for Gautam Adani’s Arrest Over ₹2,000 Crore Scam