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Sebi rejects consent pleas of RIL firms

Last Updated 04 January 2013, 16:08 IST

Sebi has rejected consent applications of Reliance Industries (RIL) and its 12 associate companies among the list of 149 entities for violations of various rules, since May last year.

In an official release issued by the market regulator recently, Sebi said the aforementioned consent applications, akin to out-of-court settlements, has been rejected in the wake of criticism that such pleas under which investigated companies pays a penalty without admitting or denying guilt tantamounts to allowing offenders to virtually go scot free.

So, the regulator had modified the rules for considering such applications. While rejecting 149 applications, Sebi stated that the decisions were in-sync with the revised consent plea rules introduced recently. Under the new rules, insider trading, front-running, failure to make an open offer to shareholders of a listed firm, and manipulation of net asset value (NAV) of mutual funds can no longer be settled through a consent plea. Twelve entities of RIL are: Vinamra Universal Traders, Reliance Ports & Terminals, LPG Infrastructure (India), Gujarat Petcoke and Petroproducts Supply, Relogistics (Rajasthan), Relogistics (India), Relpol Plastic Products, Darshan Securities, Fine Tech Commercials, Dharti Investment & Holdings, Aarthik Commercials and Mo Tech Software.

Corporate governance

Sebi on Friday put out a paper envisaging a makeover of corporate governance norms for listed companies with measures like arming minority shareholders with greater powers to hefty penalties for non-compliance, to mention a few.

The paper also proposed a new concept of 'Corporate Governance Rating' by independent agencies to monitor the level of compliance by the listed companies and regular inspection by Sebi and stock exchanges. It also dwelt on issues seeming exorbitant (not justifiable) salaries to chief executives and an orderly succession planning. Sebi said, “On average, the remuneration paid to CEOs in certain Indian companies are far higher than the remuneration received by their foreign counterparts and there is no justification available to that effect.”

At the same time, the regulator proposed mandatory disclosures by listed companies with regard to the ratio of remuneration to the each of their directors and their staff salary. Sebi has sought comments on the consultative paper from people until January 31.

Although such disclosures have already been proposed in the Companies Bill 2012 for all public companies, but Sebi is seeking such a provision for listed companies in advance, along with a number of other corporate governance measures contained in the proposed bill that is awaiting final Parliamentary approval.

“....it is seeking to adopt better global practices through these proposals without increasing the cost of compliances by a huge margin,” the paper said, adding such a move was necessary to restore the confidence of investors in the capital market especially “for channelising savings into investment, which is the need of the hour”.

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(Published 04 January 2013, 06:31 IST)

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