It was quite clear even when a corporate governance report was recommended two years ago for inclusion in the company annual report that it would not really serve much of a purpose. It has become another ritual as audit and directors' reports.

The corporate governance report provides some information on board meetings, status of directors' meetings,stock prices, shareholder ownership, shareholding distribution, compensation committee and directors' compensation and an audit report on compliance with corporate governance listing requirements. To that extent, the corporate governance report has served a small purpose.

But whether the requirements of a report has led to improved corporate governance is subject to a high degree of doubt. Companies which were noted for relatively better quality governance, before the SEBI-mandated Kumar Mangalam Birla report continued to do pretty much the same. It is difficult to cite even five companies where corporate governance has improved due to the SEBI-dictated listing norms.

Corporate governance involves a number of subjective factors. Hence, rating is inherently difficult and misleading.

And good governance is something that flows from the values and ethics of the promoters and/or top management to the operations of the company. The likes of Infosys, Wipro, Sundaram Finance, Sundram Fasteners, HDFC and HDFC Bank form part of a short list of those that enjoy a higher degree of credibility because of the investors' faith in the promoters/management.

Much depends on the care and probity attached to growing a business with public money and the commitment to do so without sacrificing the interests of any of the stakeholders — employees, suppliers, creditors, lenders, shareholders and society.

This is not something that SEBI's corporate governance norms and ratings can bring about. For instance, the New York Stock Exchange, which recently approved a revised set of corporate governance norms, states at the outset`... .approach recognises that new prohibitions and mandates, whether adopted by the NYSE, the SEC or Congress, cannot guarantee that directors, officers and employees will always give primacy to the ethical pursuit of shareholders' best interests.

The system depends upon the competence and integrity of corporate directors, as it is their responsibility to diligently oversee management while adhering to unimpeachable ethical standards...''Instead of requiring routine corporate governance reports and rating of corporate governance, what SEBI should focus on are areas where its stipulations and actions can have an effect:

Good corporate governance and disclosures/transparency should not be confused. What stock exchanges and SEBI can tackle is the latter. The former is either there in the mindset of promoters/top management or not. There is not much one can do about it.

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