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UK Sinha, the chairman of the Securities and Exchange Board of India, took exception to the regulator being equated to a dragon; a comment by a corporate chieftain in a recent interview, and justified Sebi’s actions while speaking at the 178th annual general meeting of the Madras Chamber of Commerce & Industry.
“There are instances where SEBI was called an activist, now we are called a Dragon. Have we actually turned into one? If so, why?,” he asked.
He pointed out that the regulatory intervention is a product of the prevailing environment, both global and local.
“Brazil, Egypt, Turkey or any other part of the World, including India, the phenomena observed in the last five years on matters of public concerned huge protest are made.
Earlier protests were being made, normally you had the students, unemployed youth or at times some hired people, for a particular cause. What we are seeing today? Young professional, male and female, people who have their own jobs.”
The change is a part of a need for ongoing evaluation of current systems and processes, and the people at the helm of things.
“Regimes are changed and have changed. In completely unexpected manner and across the continent. If this is happening in our social and political life all over the world, how can the corporate world can stay from that?”
He referred to a commission to review the financial crises which noted that the problem was due to the failure of corporate governance in large financial firm and the culture of extra ordinary risking taking.
“You are complaining about what Companies Act 2013 has done, complaining about SEBI has done, kindly look at other parts. Infact somebody made a complaint in Media that if this happens we will go outside the country. I wonder which justification they have in their mind. … and I can go country by country.”
He said that in the UK the Chairman of the remuneration committee has to resign if he makes a recommendation which is not carried by more than 75 per cent in the shareholders meeting. In Australia they have a mechanism, whereby investors can come and meet with officials outside the board meeting.
He also pointed out that regulators are increasingly looking beyond penalizing companies.
“Regulators are…finding that imposing penalty on the company is not good enough...In Hong Kong, UK and USA more and more executives are penalised in their personnel capacity. Key management people are being penalised by the regulator. This is what is happening in many of the countries…”
“…by and large the foreign investors community is satisfied and happy with the corporate governance norms that we have. I imagine this is the transition time, starting from October 2013 and for the next six months it may continue, it will be challenging. But if you want India to be accounted for as a good investment destination, please follow what we prescribe and start implementing. You can always make a noise, raise demand and there should be a mechanism for your demand to be heard. As far as SEBI is concerned I assure you we want to listen, we discovered that number of areas our Corporate Governance guidelines can be aligned with the companies Act and we are going to do that.”
