The Hindu Business Line : Plans afoot to upgrade National Foundation for Corporate Governance

THE Ministry of Company Affairs (MCA) has stepped up activities for promotion of good corporate governance practices in India. Towards this end, the Ministry is planning to further upgrade the National Foundation for Corporate Governance (NFGC), a non-profitable trust, into a national centre for advocating and promoting such activities, official sources told Business Line.

In the past, some initiatives were taken by the Ministry for setting up centres of corporate excellence in different States but the idea could not be taken to its logical conclusion, as only a few States were enthusiastic about it, the sources said. In order to enable the Ministry to proceed in this direction, it was necessary that a dedicated secretariat of the NFCG, having suitable manpower and requisite facilities, be evolved, sources added.

The Ministry is also planning to strengthen the Investor Education and Protection Fund (IE&PF) to make it more purposeful and to establish a link between the NFCG and IE&PF, since protection of investor interest would have to be an integral part of the good corporate governance, they said.

The Government's commitment for promoting good governance amongst the companies cannot be translated into reality unless concerted efforts are made for disseminating these practices to all companies working in the country (over 7 lakh), as the present focus is only on the listed companies, which form a very negligible percentage of the total companies registered, they pointed out.

Also, with the increasing liberalisation and globalisation, the aspect of corporate social responsibility (CSR) needs to get the desired focus.

With a view to achieving this objective, the NFCG would have to be evolved as the centre for undertaking and coordinating different studies, activities, and facilitating training and research in the related fields in a proactive way, the sourced added.

This would also require active cooperation of the State Governments, chambers of commerce and industry other institutions. The NFCG has a three-tier structure for its management - the governing council, board of trustees and the executive directorate.