India Inc can’t stay aloof: Sinha

Demanding greater accou-ntability from corporate boardrooms, Sebi chairman U.K. Sinha on Tues-day warned corporates saying that it cannot rem-ain completely immune from what is happening in the larger political spectrum as world over there is a growing people’s movement asking for greater transparency and accountability.

While speaking at a corporate governance summit organised by CII, the Sebi chief pointed out that individuals heading governments in several countries had to leave amidst widespread protest movement by people including students and young professionals.

“Can corporates remain aloof from such trends During the last four years, if we look at S&P 500 companies, about one-fourth of the CEO had to leave office after being voted out in the annual general meeting. Shareholder activism is growing worldwide and I urge the Indian companies to take a serious note of it,” he said.

Referring to a fair and effective markets review report released by the UK’s financial regulators in June 2015, which is expected to be implemented by G20 countries, Mr Sinha said that the report has discussed in detail on how to raise the performance level and accountability of key managerial personnel (KMP) in an organisation. “Instead of going behind a company, the idea is to go after the individuals running the organisation,” he noted.

The Sebi chairman also added that several instan-ces of willful default of loans and diversion of funds by Indian companies, which has led to a rise in non-performing assets (NPA) could have been avoided if the board members had exercised caution or had asked relevant questions at the right time. Another area, which according to Mr Sinha is gaining popularity worldwide, is the environmental and social issues.

“In May 2015, the Nor-way government passed a law, asking its $900 billion sovereign wealth fund not to invest in companies that generate more than 30 per cent of their output or revenues from coal related activities,” he said.