Sebi board strengthens corporate governance norms
The markets regulator has set new rules aimed at improving corporate governance in publicly traded companies, made algorithmic trading accessible and cut mutual fund fees. The Securities and Exchange Board of India’s (Sebi’s) board approved the norms on Wednesday.
The board accepted about half of the 80-odd suggestions made by a panel led by banker Uday Kotak to improve corporate governance, Sebi chairman Ajay Tyagi said.
The sweeping changes in governance standards will span areas including the composition of boards, the make-up of board committees, treatment of subsidiaries, disclosure for related-party transactions, audit evaluations and conduct of annual general meetings.
The board has approved an enhanced role for audit, nomination & remuneration and the risk management panels. It has also accepted a proposal to disclose auditor credentials, audit fees and reasons for auditors’ resignations.
“By and large, the regulator has accepted the recommendations of the Kotak panel,” said Sai Venkateshwaran, partner, and head, accounting advisory services, KPMG in India. “Though these steps will increase compliance costs, it will also increase the value of the company.”
The panel’s recommendation on increasing the oversight on auditors will be decided to keep in mind the norms proposed by the corporate affairs ministry for auditors and changes that may occur due to the setting up of National Financial Reporting Authority, the proposed independent regulator for auditors.