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Wednesday, Dec 10, 2003

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Cos cool to improving corporate governance: SEBI chief

Our Bureau

Kolkata , Dec. 9

THE Securities Exchange Board of India Chairman, Mr G.N. Bajpai, today asked the corporate sector to be more responsive towards the market regulators' effort in improving corporate governance practices.

He was speaking at an interactive session at the Indian Chamber of Commerce and Industry here.

Mr Bajpai said the Narayana Murthy Committee recommendations were open to suggestions from corporate sector and other stakeholders. However, hardly any reactions had so far been received by the SEBI.

He also felt that the corporates largely had also not woken up to the idea of governance ratings offered by some rating agencies. Only a dozen have so far adopted the practice of rating their governance.

Responding to Mr S.K. Birla's comment that the Narayana Murthy panel's suggestion on the independent directors was inappropriate and discriminatory against promoters, Mr Bajpai said that SEBI was not trying to legislate business ethics but merely trying to lay down a broad framework by which a balance could be struck among the conflicting interests of various stakeholders of a company.

The SEBI Chairman, however, accepted a suggestion by Mr Rajive Kaul of the Nicco group that the cost of listing for a small-capitalised company should be proportionate to the benefits derived by the company and its shareholders. Mr Kaul felt that the small companies might be allowed to delist.

The market regulator had observed a trend towards delisting in the bearish market impairing small investors' interest. Also a tendency witnessed among certain promoters to strip wealth of company by way of fresh preferential allotment and unloading of old holdings taking unfair advantage of position and price differential, the SEBI Chairman mentioned.

Mr Bajpai said out of 45 globally accepted accounting standards, 43 are in place in India. Of the remaining two, the standard related to banking is being formulated by the RBI and ICAI.

He observed the stock market had become efficient since the last big scam in 2001. More and more FIIs, which had left the market in 2001 were returning because of improved risk management. "In the last two years, the systemic risk never went beyond five per cent," Mr Bajpai pointed out.

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