The Hindu Business Line : `Practise good conduct for easy compliance of rules abroad'

The Securities and Exchange Board of India Chairman, Mr M. Damodaran, on Thursday came up with a piece of advice that domestic companies looking to go overseas through the acquisition route may well pay heed to.

"If entities that are regulated in India conduct themselves well, then I think the level of preparedness for doing abroad improves. If you make compliance and good conduct a habit here, it makes that much more easier for you to comply with rules abroad," Mr Damodaran said at a session on `Regulations: Rules across Geographies' at Mindmine Summit 2007, organised by Hero Mindmine Institute.

This advice of the capital market regulator is quite timely, as the country's outbound investments this fiscal is expected to exceed the net inward foreign direct investment.

Net FDI inflows this fiscal is likely to touch $12 billion. As more Indian companies move their footprints abroad, understanding and mastering the regulatory framework of a foreign country has assumed importance.

Stating that the world is better regulated place every day than the previous day, Mr Damodaran said the stronger level of coordination and cooperation among securities regulators has made transgression of rules that much more difficult.

He urged corporates looking to go abroad to keep themselves updated on the changing regulations across geographies.

The SEBI chairman also wanted them to look at prescriptive arrangements dealing with money laundering besides sorting out issues on how disputes would be resolved.

Commenting on the development of stock exchanges buying into stock exchanges across geographies, especially the recent move of NYSE Group Inc to take a 5 per cent stake in National Stock Exchange, Mr Damodaran said this raises jurisdictional issues and "we need to familiarise with the implications of these issues".

Later, asked if the same foreign investor could buy 5 per cent stake in two different stock exchanges of the country, Mr Damodaran said this throws up both legal as well as commercial issues.

"Let us cross the commercial issue (let such a development happen) and then we can talk about the legal issue," he told reporters.

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