Infosys gets first S&P governance rating

Standard & Poor's (S&P) governance services today assigned a corporate governance score (CGS) of CGS-8.6 to Infosys Technologies. This is the first instance of S&P assigning CGS to any Indian entity.

"Infosys has demonstrated strong standards of corporate governance. This score demonstrates that companies can create the right conditions for high standards of corporate governance both in developing as well as developed economies," said S&P's governance analyst Dan Konigsburg.

The overall CGS is a result of four component scores with a scale of 1 (low) to 10 (high). Infosys has scored nine for ownership structure and influence; 8.3 for financial stakeholder rights and relations; 9.2 for financial transparency and information disclosure; and 8.0 for board structure and process.

S&P believes that the ownership structure at Infosys is transparent and well disclosed, and there is a strict separation of ownership from control among the founders and managers of the company, a release said. Financial stakeholder relations, however, presents a mixed picture.

Although shareholders cannot legally vote for all items by post or Internet, ownership rights are strongly defended. Further, there is a simple share structure and there are no explicit anti-takeover defenses in the company's articles.

Financial transparency and information disclosure has been assessed as strong. In some cases, Infosys provides thoughtful disclosure on items that few other companies have pursued.

Timing and access to disclosure is strong, given the company's compliance with the US Securities and Exchange Commission's regulation on fair disclosure and its lobbying of the Indian regulators in this area, the rating agency pointed out.

The lowest relative score was with Infosys' board structure and process, though this is still assessed as strong, given its success at bringing in a large number of outside directors in a relatively short amount of time.