When Government companies list their shares on stock exchanges, they are required to deal with two distinct constituencies from a corporate governance standpoint: one, being the Government itself as the controlling shareholder or promoter, and the other, being the minority (public) shareholders. When the Government is in a controlling position in the company, the obvious question that arises is...
“Beyond Satyam: Analyzing Corporate Governance in India”
That was the theme for a panel discussion organized last week in New York by the Jindal Global Law School. The panel consisted of internationally renowned academics and practitioners of corporate governance: Mr. Roel Campos, former SEC Commissioner, Professor John Coffee of Columbia Law School, Professor Michael Useem of the Wharton Business School and Professor Vikramaditya Khanna of Michigan...
Concept of “Promoter”
In his column in the Business Standard, Somasekhar Sundaresan makes an interesting argument for abolishing the concept of “promoter” under various SEBI regulations and for encouraging board-driven governance in Indian companies.
Paper on Corporate Governance
I have posted on SSRN a paper titled “A Cautionary Tale of the Transplant Effect on Indian Corporate Governance”, the abstract of which is as follows: “During the last decade, there has been a sustained effort on the part of the Indian regulators to strengthen corporate governance norms. This been strongly influenced by developments that occurred in other parts of the world, particularly the US...
Companies Bill, 2008: No advisory services by auditors
One of the important measures taken in the Companies Bill, 2008 is to prevent Chartered Accountants from offering actuarial, advisory and management services to companies which have engaged them as statutory auditors. Section 127 of the Bill provides: An auditor appointed under this Act shall provide the company only such other services as are approved by the Board of Directors or the audit...
Ceiling on Executive Pay
In previous posts, we had highlighted significant differences between the law on executive pay in the US and in India, and how the Indian regime may be more conducive to preventing excesses by corporate executives. In the US, the position is as follows: Excessive managerial influence also extends to fixing managers’ own remuneration. In a book titled Pay without Performance: The Unfulfilled...
Listed Government Companies and Corporate Governance: A Supplement
A previous post on this Blog by Mr. Jayant Thakur raises valid issues regarding corporate governance and government-owned companies. Although I am in agreement with the position stated, it may be useful to highlight certain other complexities this matter gives rise to. I initially began by writing a comment to his post, but owing to its length, decided to post it separately as a supplement. Here...
SEBI moves to tighten insider trading norms by prohibiting opposing transactions
In an earlier post, Mihir had remarked that while arguments for legalizing insider trading are interesting, there is a long way to go before they are actually accepted by legal systems. SEBI’s recent move to tighten insider trading norms is a case in point. ET reports that SEBI will soon amend its regulations to ban insiders from any opposing transaction within a period of six months. ‘Insider’...
History Repeats Itself: Whither Governance? (Part 3)
In two previous posts (here and here), we discussed the several corporate governance issues that have been accentuated on account of the current financial turmoil emanating from the U.S. In this post, we examine some of the differences between corporate structures and governance in the U.S. and India. In India, companies predominantly display concentrated shareholding structures (as opposed to...
History Repeats Itself: Whither Governance? (Part 2)
In the background of the boardroom failures discussed in the previous post, it is useful to explore some of the factors involving U.S. corporate governance that may have led to this situation. 1. Dispersed Shareholding and Lack of Oversight One of the key problems involving a dispersed shareholding model (that is prevalent largely in the U.S. and U.K.) is that the individual shareholders have...
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