The Hindu Business Line : SEBI to encourage disclosure of corp governance rating

THE Securities and Exchange Board of India will encourage companies to disclose their corporate governance rating, though it will not be made mandatory, according to Mr G.N. Bajpai, Chairman, SEBI. It is important to develop an instrument by which form and substance of corporate governance can be integrated, said Mr Bajpai. He was speaking at a seminar on corporate governance, organised by SEBI, FICCI and Crisil.

Corporates could be offered incentives for good governance, according to Mr Sumant Sinha, President & Head (Group Corporate Finance), Aditya Birla Group. It is increasingly important for Indian corporates to ensure high levels of disclosure and good governance because of the intensifying competition for global capital and growing investor awareness, he said.

Raising the standards of governance, effective implementation and multiple regulatory bodies are the challenges of implementing the corporate governance rating, pointed out Mr Sinha. An analysis of top Indian companies indicated that companies that fall in the top quartile in terms of corporate governance have consistently out-performed the markets.

There is scope for improvement in the composition and functioning of boards of companies, said Mr R. Ravimohan, Managing Director & CEO, Crisil. He added that the Chairman and Chief Executive Officer posts should ideally be two separate posts. The corporate governance rating indicates progress towards the "form" aspect of good governance, he said.

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