After Satyam and Enron, India got into a culture of ‘Corporate Governance’. We had committees and committees. These were headed by respected professional. It is a different matter that my favourite Mr. N Murthy now has a different definition of Corporate Governance for Infosys! However, most of the recommendations were accepted by the Ministry of Corporate Affairs (MCA) and were implemented. Some through the Company Law and mostly through SEBI. The focus of these recommendations was independence of the Board. Appointment of Directors, committees, reporting, scope etc.
We all know how the independent directors are appointed and what benefits they draw. The Kotak report now tries to restrict this. Whatever the outcome, one must give full marks to the government for perseverance. Unfortunately, good governance is more about intent and ownership than laws. Independent Directors (IDs) have learnt the hard way and through Insolvency Laws, that they could also be treated at par with the Executive and Owner Directors.
The NPA disclosures and the NBFC scam have opened a pandoras box about the casualness of the meetings. Fortis was another example where the minority shareholders stepped in. The most recent being the Apollo Tyre’s MD remuneration. Cyrus Mistry’s episode is also worth recollecting that not a single ID stood by him.
Kotak report has recommended induction process for the new Board members, raising awareness and knowledge upgradation. Most Board members have never visited the plants or regional offices, have never taken part in ground level discussions or strategic meets. With the complex and frequent changes in local and central laws, no one has educated the Board on the applicability or possible exposures.
To my mind it is not about the law, it is about ownership, leadership and activism. We as a nation are scared to unruffle feathers or bite the hand that feeds us. We are scared to criticise. Or call a spade a spade. Everyone wants to please the power that be.
And this is not only restricted to the Board, look at the garbage on the roads, law and order, air, noise and water pollution, crumbling health institutions, religious activism. It is like the companies, it requires major overhauling. For this we need a change in attitude, bravery and not bravados. More laws will not help.
We help the corporates in drafting and rolling out policies, monitoring them, inducting fresh directors, raising awareness through knowledge sessions on different aspects, meeting compliance requirement, complete documentation process, especially, where a dissent has to be recorded.
