Cluster approach for small and medium enterprises suggested
Close look at draft Companies Bill recommendedStock exchanges will be persuaded to target big companies
MUMBAI: There will be no exemption for Indian companies which do not comply with Clause 49 compliance of the Listing Agreement with stock exchanges, M. Damodaran, Chairman, Securities and Exchange Board of India (SEBI), said here on Wednesday.
Delivering the keynote address at an interactive session on `Corporate India taking Clause 49 forward' organised by the Confederation of Indian Industry (CII), Western Region, Mr. Damodaran explained that SEBI's approach to the implementation of Clause 49 would be to push compliance without sacrificing the interests of investors. "We are not here to punish people, but to create an environment to ensure compliance. Companies which have made genuine efforts to achieve compliance and already adhered to most of the requirements will be encouraged to complete the process soon, while those who can have tried harder will be given a push,'' he said.
At the same time, he also clarified that "Let it not be misunderstood that we will not take action. There will be a process of dialogue and I hope some of the prospective examples wake up and realise that they do not want to be mentioned in that context. Before the year is out, we will persuade the stock exchanges to target big companies who are able to comply but have not made the effort to do so.''
On the issue of costs involved, which many companies have claimed act as a barrier, Mr. Damodaran said, "there is a need to look at this not as expenditure but as an investment that is going to pay dividends. It is essential to communicate the fact that compliance will add value."
He urged providers to see if they could revisit the costs involved in the national interest so that small companies could also buy into those solutions. Emphasising that Clause 49 was not the end of corporate governance but just the beginning, Mr. Damodaran called for a closer look at the draft Companies Bill. "The concerns voiced in various forums must be expressed in the statute, otherwise it will be seen as the maximum level of compliance, not minimum.''
Mr. Damodaran warned companies against a growing potential `cottage industry'' of solutions providers who see corporate governance as an easy money making proposition and offer services that they cannot deliver.
He asked CII to play a role towards identifying companies or mentors who would provide value for money and help small companies instead of going through the motions.
In his welcome remarks, Jamshyd Godrej, Past President, CII, and Chairman and Managing Director, Godrej & Boyce Manufacturing Company Ltd., explained that CII had recommended a cluster approach for small and medium enterprises so that they could get inputs and push the idea of compliance through.
Shrinivas Dempo, Deputy Chairman, CII Western Region, reaffirmed industry's commitment to compliance.