Financial Daily from THE HINDU group of publications
Friday, Aug 29, 2003
Financial Daily from THE HINDU group of publications Friday, Aug 29, 2003 |
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Corporate
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Regulatory Bodies & Rulings `Legal provisions alone cannot check corporate failures' Our Bureau
New Delhi , Aug. 28 EVEN while advocating proper checks and balances on corporate functionaries, the Chairman of the Company Law Board (CLB), Mr S. Balasubramanian, has cautioned that one cannot go by the notion that stringent statutory provisions alone can curb corporate failures. Addressing a national convention on `Emerging role of CEOs and CFOs' organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Institute of Chartered Accountants of India (ICAI) here today, Mr Balasubramanian held that the statutory provisions should not impede the freedom of action. "If, as on date, we have a number of successful corporate entities, it is because of dedicated promoters. "Just because there has been a few instances of corporate failures attributable to the acts of promoters, one cannot assume that stringent statutory provisions alone can curb corporate failures." On independent directors, the CLB Chairman held that the selection and appointment of independent directors should be transparent and on certain value basis. "Companies should have an entirely independent nomination committee which should determine the qualification for board membership and should identify and evaluate candidates for nomination to the Board," he suggested. He also highlighted that the Companies (Amendment) Bill, 2003, in its present form, does not define independent director even as it specifies the grounds that would disqualify a person from being considered as an independent director. Mr Balasubramanian felt that it would be more appropriate that the code of corporate governance of a company should specifically include the qualifications and attributes that the company seeks of an independent director. Stating that the position of law, as far as independent directors are concerned, was quite nebulous, the CLB Chairman held that specialists in the area of accounting and finance, technology relevant to the company, corporate management and industry knowledge could be considered for independent directors.
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