Financial Daily from THE HINDU group of publications
Wednesday, Dec 04, 2002
Financial Daily from THE HINDU group of publications Wednesday, Dec 04, 2002 |
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Corporate
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Corporate Governance Corporate governance rating won't be made mandatory now Our Bureau
The SEBI Chairman, Mr G.N. Bajpai, with the FICCI President, Mr R.S. Lodha, at the conference on `Models and dimensions of corporate governance: Fulcrum for sustaining wealth creation' in the Capital on Tuesday.
NEW DELHI, Dec. 3 RATING of corporate governance practices of listed companies will not be made mandatory for the time being, the Chairman of the Securities and Exchange Board of India (SEBI), Mr G.N. Bajpai, said here on Tuesday. "We are not going to make it mandatory for listed companies to get the corporate governance practices rated. Initially, the rating will be available from the agencies on an optional basis. Companies can voluntarily get themselves rated. Companies that get a good rating are going to benefit from higher valuations", Mr Bajpai told newspersons on the sidelines of a conference on `Models and dimensions of corporate governance: Fulcrum for sustainable wealth creation'. The two-day conference is being organised by SEBI in association with the Federation of Indian Chambers of Commerce and Industry (FICCI). Mr Bajpai's assurance came as a relief to a section of industry representatives, who were concerned about the cost of compliance if the rating of corporate governance practices were to be imposed on them. The FICCI President, Mr R.S. Lodha, too raised the issue of cost of compliance and underscored the need for the capital market regulator to undertake a cost-benefit analysis before imposing any regulations on the corporate sector. "I am not saying that we will not comply with the regulations. What I am trying to emphasise is that the cost of compliance has financial cost as well as time cost for senior management and that there should be a perennial cost-benefit analysis before bringing any regulations", Mr Lodha said. While agreeing with the FICCI President that any regulatory regime should not be expensive for corporates to comply with, the SEBI Chairman pointed out that "one cannot overlook the fundamental need of good corporate governance" merely on account of "not being able to foot the bill". Mr Bajpai said that corporate governance is fundamentally a "leadership" issue and involves the entire organisation. He said that corporate governance cannot be restricted to board room practices alone.
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