Excerpts from the discussion:
Mr. Ravi A. Gautham, SVP, Northern Trust
Mr. Ravi A. Gautham emphasized not only on the need of rules and laws, but also on the spirit in which they are being implemented. He lauded SEBI for their good formulation of regulations by going from 47th to 7th rank across the world. He emphasized that for implementation, everyone including corporates and investors have to get involved. He also said that many institutions are working towards educating investors about their roles, rights, responsibilities, and the influence they can have on the running of a business. At the end, he also mentioned the importance of women participation on the board to have a different perspective in the corporate.
Mr. Amit Chakraborty, VP, CFA Institute
Mr. Amit Chakraborty agreed with the other panelists that corporate governance should start with ethics and not profits. According to him, the output of ethics is Investor’s Trust. He explained that investors usually do not trust corporates. Hence, regulators come in picture to convince them that they will protect the interest of the minority shareholders. This could increase the number of regulations, which in turn increases the time spent by corporates in complying with them. This implies less time to do business, which translates into lower profits. Thus, he emphasized that when investors trust corporates, everybody is a winner.
Mr. Sridhar Seshadiri, VP, DCB
Mr. Sridhar highlighted that the drawbacks are not in regulations but in implementations, as investors do not understand the power that has been vested to them by SEBI. Hence, they do not voice their opinion, and instead move out of the company. Thus, he concluded that regulations are more about education for investors to understand their rights. He explained that most companies in India are dominated by their promoters, hence, the investors have an opinion that the companies are driven solely by their decisions, without the opinion of the minority shareholders. With respect to gender diversity, he explained that if the intention is right, things will improve as women will bring new perspective to business. He explained that hiring women at senior levels should not be viewed from a human resource perspective, it should be viewed rather from a business perspective of hiring credible women who are good, if not better than men.
Dr. Prabhakar R. Patil, Chief General Manager, SEBI
Mr. Prabhakar Patil said that corporate governance is important because it is a proxy for valuation. He emphasized the need of independent directors, especially women, on the board, which could bring selfless interest for minority as well as majority stock holders. He pointed out towards the callousness of the corporates towards independent women directors. They often do not appoint them by arguing that they are less credible; but in reality, they do not want to appoint an unknown person who could go against their personal interests. He concluded by saying that there is a need for the transparency in the corporates, only then can interest of the minority investors be saved.