The SEBI panel’s suggestions on corporate governance are good but not radical enough and mostly take the ‘tick-box’ approach for compliance, TV Mohandas Pai, chairman of Manipal Global Education, said on Sunday.

He also said that a big challenge in corporate governance is as to why should independent directors spend enormous amount of time running these companies, when there are huge liabilities and they are not compensated. Corporate governance only works when firms want to improve governance and genuinely want to do it, Pai said.

The high-level SEBI committee, headed by eminent banker Uday Kotak, has recommended major overhaul of corporate governance norms for listed companies and the report has been put out for public suggestions.

“They (Corporate governance suggestions by Kotak panel) are good suggestions but they are not radical enough and they are more of tick-box,” Pai told PTI here at the sidelines of Rajasthan Digifest.

“I wish more corporate inputs were there. It’s good but it’s incremental as chairman and MD post has been there for a long period of time,” he added. The panel recommended limiting chairmanship to only non- executive directors. The proposal would eventually lead to a split in the posts of chairman and managing director.

Earlier, proxy adviser InGovern had also echoed similar views on the panel’s suggestions. It had said that the Kotak’s panel suggestions are prescriptive in nature presenting a risk that companies might undertake a ‘tick-box’ approach for compliance. Pai further said that the culture of corporate governance is important and has to be led from the top level.

“When you have board of eminent people, who are independently minded and strong enough to walk in case something goes wrong, and you feel that they are genuinely contributing, and the contribution comes when you spend enormous amount of time.

“For that time, you need to be compensated, and the compensation structure is not adequate,” Pai said.

He also said that the recent Supreme Court order in case of Jaiprakash Associates, wherein the company’s independent directors including their relatives have been barred from selling their properties, is very scary and will be a setback for corporate governance in a big way. “I don’t know why anybody wants to be a director,” he added.

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