'Allow SEs to recommend winding up of erring cos.'

By Our Special Correspondent

CHENNAI, SEPT. 15. Stock exchanges should be permitted to recommend winding up of erring companies, in the interest of encouraging good corporate governance, according to Mr. Anand Rathi, President of the Bombay Stock Exchange (BSE).

Making a presentation on corporate governance under the auspices of the Madras Stock Exchange (MSE) on Thursday, Mr. Rathi also suggested that several provisions introduced in the listing agreement to implement the corporate governance code should also be incorporated in company law.

Mr. Rathi said corporate governance was essentially a matter of mindset and should not be looked at merely as another set of laws to be complied with. The corporate governance codes were aimed at separating not just management from ownership, but more importantly supervision from management. The audit committees, which were among the most important mechanisms introduced under the corporate governance code, would ultimately help companies understand their strengths and weaknesses. After all, the company boards still retained their policy-making powers, he pointed out.

Corporate governance would assume ever greater importance in future since it would reflect on the market capitalisation of companies and the value they could create for shareholders.

The BSE President said it would not make any difference in practice if nominee directors of financial institutions were considered independent directors, as interpreted by FIs.

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Section  : Business
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