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SEBI warning to cos.
defying Clause 49 provisions
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.
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