JP Morgan Chairman Morparia cautions against criminalising corporate law

Kalpana Morparia, Chairman, South and Southeast Asia, JP Morgan, has cautioned government and regulators against criminalising corporate laws and the legal system should not consider everybody is guilty unless proved otherwise.

Highlighting the evolving role of independent directors in the backdrop of the myriad of laws which now intently regulate the conduct of independent directors, she said the trend of criminalising business laws has become a worrisome factor for independent directors particularly after the fallout of recent mis-happenings in the corporate system.

While economies and businesses evolve, there may be transgressions, but it is vital to fix responsibility. The presumption that all are guilty unless proved otherwise is not how juris prudence should work, she said at the Confederation of Indian Industry event on Friday.

Criminalisation of business laws needs to be done away with, especially for provisions like CSR (corporate social responsibility) which were never mandatory.

Diversity in Board should go beyond gender diversity to ensure that it has the right mix of skills. There is a constant need for independent directors to challenge the Board for information that Directors need rather than the information that is shared by the management by way of the colloquial ‘show and tell’, she said.

Deliberating on evaluation of Board members, she opined against regulations like tenure and age limit, especially intra-term age limit of independent directors, comparing the same to US laws where Directors are elected by shareholders every year. She insisted on creating an online repertoire of information and knowledge for Directors as opposed to mandatory examinations recently mandated by law.

Sai Venkateshwaran, Partner, KPMG in India, articulated that companies face enhanced regulatory scrutiny in addition to growing trust deficit amongst the players in the corporate governance ecosystem. Seldom before have boards in general and independent directors in particular needed to play as important a role as they do today, in steering the organisation and its strategy to ensure its long-term sustainable growth.

Krishnava Dutt, Managing Partner, Argus Partners, asserted that the role of an independent director is getting more and more challenging. The legislative expectation is a ‘hands-on director’ where the legal obligation of all directors are equal. Thus the line between obligations of a whole time director and a non – executive or an independent director is becoming thinner by the day.