Date:01/04/2005 URL: http://www.thehindubusinessline.com/2005/04/01/stories/2005040102750300.htm

Back `Money spent on corporate governance compliance is investment'

Our Bureau

Mr M. Damodaran (right), Chairman, SEBI, handing over the Mother Teresa Award for Corporate Citizen 2004 to Mr H. Lakshmanan, Director, TVS Motor Company Ltd, in Chennai on Thursday. The award has been instituted by the Loyola Institute of Business Administration (LIBA). - Bijoy Ghosh

Chennai , March 31

COMPANIES should see cost of compliance with corporate governance norms as an investment in protecting the interests of stakeholders and not as an expenditure, Mr M. Damodaran, Chairman, SEBI, said today.

Speaking to journalists on the sidelines of a function held here by the Loyola Institute of Business Administration (LIBA), Mr Damodaran said that after the Clause 49 is implemented, cost of compliance would be higher than now, "but how high is high?"

Mr Damodaran said that SEBI and the Ministry of Company Affairs had set up a task force to investigate into companies that came out with public issues and vanished. However, the answer really is investor education, he said. SEBI, on its part, had made entry norms so strict that, unlike earlier, dubious companies could not just take public money and disappear.

Earlier, speaking at the LIBA function, Mr Damodaran said that the main challenge before the regulator was enforcing corporate governance. He called for India to set standards for the rest of the world, in corporate governance.

The LIBA Corporate Citizen award for 2004 was given away to TVS Motor Company. Shakthi Masala, which employs a large number of physically challenged persons, got a `commendation award'.