Nearly 200 firms found lacking on corporate governance norms

Nearly 200 listed firms have come under regulatory scanner for discrepancies in their quarterly Corporate Governance Reports, wherein they are required to provide details of compliance with norms governing board of directors, use of public funds and CEO salaries.

Besides, hundreds of other companies have been found to be late in submission of these reports, which are required to be submitted to the stock exchanges within 15 days from the end of every quarter.

These firms are being asked by stock exchanges to rectify the discrepancies in their reports and to explain the non- submission or late submission of their reports, following which it would be decided as to what action, if any, can be taken against them, a senior official said.

While more than 1,000 companies are yet to submit their compliance report for quarter ended September 30, 2012, close to 500 companies submitted their reports after the end of the deadline for that quarter, as per the latest data complied by the leading bourse BSE as on January 2, 2013.

The BSE is writing to all those companies, in whose Corporate Governance Reports it has found the discrepancies, while asking them to rectify the same.

Filing of Corporate Governance Reports is currently governed by the Clause 49 of Listing Agreement that every listed company needs to sign with the stock exchange.

However, market regulator Sebi is seeking to overhaul the corporate governance norms for listed companies. It has proposed converting the Corporate Governance provisions of Listing Agreement into separate regulations for better enforcement.

Sebi is also seeking to impose hefty penalties on the companies, their directors and top executives for non-compliance "either in spirit or letter".

Currently, the Quarterly Corporate Governance Reports of the companies are required to contain compliance status on norms for board composition, compensation and disclosures for non-executive directors, their code of conduct, details of audit committee, disclosures related to subsidiaries, use of proceeds from public share sales and top managerial salaries.

In its proposed wide-ranging overhaul of corporate governance norms, Sebi has mooted measures like checks against unjustifiable CEO pay, greater powers to minority shareholders, an orderly succession planning and hefty penalties for non-compliance.

Besides, the regulator has 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.