India Needs To Improve Its Corporate Governance
By: Ainsley Brown
India has needs to improve its corporate governance regime; so says, the Hong Kong based advocacy group, Asian Corporate Governance Association (ACGA).
The ACGA’s report comes in the wake of the Satyam Computer Services scandal where the companies head admitted to defrauding the company for many years. The scandal helped expose so of the obvious as well as not so obvious weaknesses in the Indian corporate governance regime.
The report, which will be presented to government officials, the Securities and Exchange Board of India (India’s securities regulator) and stock exchanges, points out several areas in need of reform. Four such areas in need of reform are:
- Related-Party Transactions – this is an issue in India as many companies are either owned or controlled within one family and companies are sometimes run like personal fiefdoms.
- Corporate disclosures – India needs to improve corporate transparency in a major way given for example as the report points out the misuse and abuse of warrants in India.
- Shareholder voting rights –many investors are rob of a chance to air their views at annual meetings as annual meets are often held in far off places, with relatively little notice.
- The Auditing profession – the highly fragmented nature the profession in India and regulations mostly geared to insure the survival of small firms often over improvements in quality and service has done a tremendous disservice to what ought to be a cornerstone in any corporate regulatory regime.
The question that remains will law makers, regulators and corporate insiders accept or reject the reports findings and recommendations?
