With several legal and regulatory issues affecting the microfinance sector lately, more so in the state of Andhra Pradesh, the Reserve Bank of India (RBI) had appointed a sub-committee under the chairmanship of Mr. Y.H. Malegam to “study issues and concerns in the microfinance sector in so far as they related to the entities regulated by the [RBI]”. The keenly awaited report, which was expected...
CSR: Not Mandatory After All
A couple of months ago, the Ministry of Corporate Affairs (MCA) announced its intention to include a mandatory provision for corporate social responsibility (CSR) in the Companies Bill. The issue of regulating CSR using the stick of a mandatory provision was the subject-matter of critique, including on this Blog. The Government appears to have taken an about turn now doing away with the mandatory...
Movement Towards Mandatory CSR
A few weeks ago, we discussed the Government’s proposal to introduce mandatory provisions regarding corporate social responsibility (CSR). A press release issued yesterday by the Ministry of Corporate Affairs suggests mandatory provisions for CSR will be included in the new company legislation. The release states: In response to the overwhelming concerns shown by the Standing Committee of...
Bits of Interest
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...
Viability of Mandatory CSR
CNBC reports on a proposal by the Government to require companies to introduce mandatory CSR spending: Corporate social responsibility (CSR) spends will now be made mandatory for corporate India, sources in the Ministry of Company Affairs told CNBC-TV18. If approved, companies will have to spend 2% of the average net profit on CSR. Mandatory CSR will be made part of the amendment to the Companies...
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...
Mutual Funds as Activist Investors
On several occasions, discussions on this Blog have pointed to the inadequacy of shareholder activism (spearheaded by institutional investors) in India, and have therefore called for greater participation of institutional investors in governance processes. A circular issued by SEBI on March 15, 2010 addressed to mutual funds and asset management companies represents an important step towards...
Inculcating Business Ethics
Following the financial crisis, there has been a reconsideration of the manner in which business schools have been imparting education. Questions are being raised as to whether alternate methods of business education could have modified some of the ethical and behavioural traits that may have fuelled the crisis. In this scenario, an article in the New York Times provides an interesting...
Voluntary Guidelines on Governance and Social Responsibility
Corporate Governance Earlier this month, we had highlighted the recommendations of the CII Task Force and the Institute of Companies Secretaries of India seeking reforms to the existing regime for corporate governance in India. Shortly thereafter, and based on various other suggestions received, the Ministry of Corporate Affairs has published the Corporate Governance Voluntary Guidelines 2009...
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