1. SEBI and Auditors: It was reported a few days ago that the Bombay High Court has allowed SEBI to proceed with its enquiry against the auditors in connection with the Satyam scam. The judgment is now available on the Bombay High Court website. 2. Satyam Saga: With all the accused persons now having been released on bail, questions are being raised regarding the investigative and prosecutorial...
Regulating Bankers’ Pay
Consistent with international trends to impose greater regulation on executive compensation in banks, the Reserve Bank of India (RBI) has issued draft guidelines on compensation of whole time directors/ chief executive officers / risk takers and control function staff. This applies to private sector and local area banks and all foreign banks operating in India, and is in addition to tight...
Academic Literature on Independent Directors in India
Events in Indian corporate governance that occurred starting January 2009 have spurred academic research on the role and effect of independent directors on corporate boards. While some findings indicate an important role for such directors on Indian companies, others are not so optimistic and call for greater reform of that institution. The purpose of this post is to point to some of the...
Risk Management Systems
1. In this column in the Mint, I attempt to stress the importance of systems for managing risk in the modern corporation.
2. In this post, Professor Jayanth Varma discusses whether systems and controls may have prevented the peculiar case of “a drunken broker (Steven Perkins) who bought $520 million of crude oil futures sitting at home at night with his laptop”!
The Social Cost of Corporations
Recent events, both in India and elsewhere, have thrown the spotlight on the roles and responsibilities of companies in society. In an interesting article “The Conscience of Capitalism” in Forbes India, Arun Maira discusses (in a non-technical fashion) the difficulties in pinning responsibility for wrongdoing by a company. Pertinently, he notes that while the “limited liability corporation is an...
Bits of Interest
1. Mutual Funds and Unit Premium The Law-In-Perspective Blog uses the analogy of Ponzi schemes to explain a March 2010 circular of SEBI that prohibits mutual funds from using the unit premium reserve to pay dividends. If one would prefer to avoid the negative connotation associated with a Ponzi scheme, the post also looks at another parallel, being the restrictions under the Companies Act, 1956...
Enforcement of Corporate Governance Norms: Anecdotal Evidence
A constant quibble with corporate governance in India is that while the body of substantive norms has been ballooning over time, the enforcement of those norms has not kept pace. In a somewhat unusual measure, the National Stock Exchange (NSE) has threatened to suspend trading of a listed company for failure to file governance reports as required under the listing agreement. As the Business...
Nasscom on Corporate Governance
In early 2009, immediately following the accounting fraud at Satyam, several committees and task forces were constituted to review corporate governance norms and practices in India. Some of them issued their recommendations late last year. These include a report by a task force constituted by the Confederation of Indian Industry (CII) and another by the Institute of Company Secretaries of India...
NLSIR Corporate Law and Corporate Governance Symposium: April 10 and 11, 2010
The NLSIR Symposium, scheduled for 10 and 11 April at the NLS campus in Bangalore, will feature several important topics that we have discussed on the blog, including corporate governance, independent directors, tax planning, tax avoidance and adjudication of company disputes. The schedule for the symposium is indicated below. Readers interested in attending may contact us by email as soon as...
Governance Norms for Central PSUs
In 2007, the Central Government issued the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs). This was a measure introduced to bring corporate governance norms in CPSEs on par with the private sector. However, it was only a voluntary measure. On March 25, 2010, the Government announced that the Guidelines would now be continued on a mandatory basis. Hence, all CPSEs...
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