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Vol
4: Issue No.5 : May, 2004 |
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| A survey conducted by the rating agency ICRA among fund managers, brokers and institutional investors has concluded that the biggest concern among the capital market participants from the corporate governance perspective was insider trading selective leaks of price sensitive information and dubious accounting practices. The survey also brings out that unethical practices and inadequate concern for minority shareholders are major worrying factors. Excessive promoter control on management, unrelated diversification and overarching CEOs were also cited as concerns, but ranked lower in the order of seriousness. The
survey says that over 90% of the respondents were willing to pay
a premium for companies with good corporate governances practices.
However, nearly 60% of the respondents were not willing to quantify
the premium. The survey said that the characteristics of good
corporate governance included high level of transparency and disclosures,
integrity of accounts, strong and independent board of directors
and active board committees.
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| Unit Trust of India and Indian Merchants’ Chamber have announced a governance award for both public governance and corporate governance. Both organizations will be collaborating for giving this award for which the corpus has been announced as Rs. One crore. IMC will contribute Rs.25 lakh, while UTI will be contributing the balance amount. Chairman and Managing Director of UTI Asset Management Company, Mr. Damodaran announced this while giving away Community Welfare Awards at the 96th Annual General Meeting of the Indian Merchants’ Chamber.
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The Department of Company Affairs (DCA) has already started work on a concept paper that will form the basis for enacting a trimmer and slender version of the companies act. Indian corporates and some of the industry associations like FICCI are in favour of a trimmer company law but it also wants the existing law to address the issue of rising costs of regulatory compliance. According
to FICCI sources, there is a general feeling that excessive
regulations under the law are forcing the company boards to
spend more time on compliance and implementation rather than
on the company’s growth. FICCI has been calling for a simple
and crisp law for private companies where public money is not
involved. The Chamber, however, agrees with the government view
that the company law must provide adequate protection to investors,
shareholders, creditors, employees and other stakeholders to
ensure that corporate wrongs are quickly and effectively addressed.
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The
Board of Administration of the California Public Employees Retirement
System (CALPERS) has voted in favour of adding India along with
Philippines and Peru, to its list of emerging equity markets where
the funds will be allowed to invest.
This is a turnaround from its earlier position. In February 2003, CALPERS had ruled out investing in some of the world’s largest countries including India, China, Indonesia and Russia and decided against returning to Malaysia and Thailand. The decision was based on an assessment of the stability and transparency of those countries, including criteria like accounting standards and labour laws. CALPERS, the largest pension fund in the US provides retirement and health benefits to 1.4 million federal state and local public employees and their families. The decision of the Board of CALPERS follows SEBI’s announcement of implementing the T+1 settlement mechanism beginning July 2004. As of February 2004, CALPERS had an equity exposure of US $ 2 billion in emerging markets. Equity markets where the fund is allowed to invest include Argentina, Brazil, Chile, Czech Republic, Hungary, India, Israel, Jordon, Malaysia, Mexico, Peru, Philippines, Poland, South Africa, South Korea, Taiwan and Turkey.
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| © 2001 Academy of Corporate Governance |
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