Govt to set up agency for corporate governance
GIREESH CHANDRA PRASAD
TIMES NEWS NETWORK[ MONDAY, SEPTEMBER 05, 2005 01:23:14 AM]
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NEW DELHI: The Corporate Affairs ministry has decided to have an umbrella agency of corporate governance which will set non-binding standards in line with the principles developed by the Organisation for Economic Co-operation and Development (OECD). This is to advocate the ‘spirit’ of governance to the industry, which sometime gets lost as companies follow the market regulator’s norms by the letter.
The National Foundation for Corporate Governance (NFCG), set up jointly by the Corporate Affairs ministry, the industry and professional regulators of accountants and company secretaries, will act as this agency and will initially evolve corporate governance principles in three areas — institutional investors, independent directors and auditing.
These would be in line with the principles the 30-member international policy advocating body has developed. OECD norms on taxation are widely appreciated. While NFCG guidelines will remain non-binding, the ministry wants it to have the sanctity of a sought after endorsement, said a senior official.
NFCG, which met in the capital on August 23 chaired by Corporate Affairs minister Prem Chand Gupta and attended by Infosys chairman NR Narayana Murthy, has also got the external affairs ministry nod to talk to four international bodies working on corporate governance such as Global Corporate Forum jointly set up by the World Bank and OECD.
The ministry of Corporate Affairs will take part in OECD’s two-day Asian round table on corporate governance beginning on September 8 in Indonesia for finalising a draft policy on corporate governance in Asian banks.
Discussions would include the characteristics of Asian banks, fiduciary duties of board members, board’s committees, firewalls against abusive related party transactions and lending, corporate governance of group companies affiliated with banks and the role of banks in improving the governance of their debtor companies. The meet would also present guidelines on governance in state owned enterprises it has finalised in April this year.
The government is now also working on setting up national centres for corporate governance at various Indian Institutes of Management.
PRESS NOTE
28 July 2004
1. The first meeting of the Governing Council of National Foundation for Corporate Governance (NFCG) was held on July 28, 2004 under the Chairmanship of Shri Prem Chand Gupta, Minister, Corporate Affairs. The NFCG is a trust, which has been set up by the Government in association with the Confederation of Indian Industry (CII), Institute of Chartered Accountants of India (ICAI) and Institute of Company Secretaries of India (ICSI). The NFCG has been set up with the objectives of deliberating issues relating to good corporate governance, sensitizing the corporate leaders on the importance of good corporate governance, self regulation and directorial responsibilities and to provide research and training in the field of corporate governance.
2. The NFCG envisages the setting up of National Centres of Corporate Governance (NCCG) by premier Institutes of Management to provide training to directors, undertake research and advocacy in the field of corporate governance. The Governing Council approved the criteria for selection and accreditation of Institutions and also approved the accredition of the following Institutions on ad-hoc basis as NCCGs: -
- Indian Institute of Management, Ahmedabad.
- Indian Institute of Management, Bangalore.
- Indian Institute of Management, Kolkata.
- Indian Institute of Management, Lucknow.
- Administrative Staff College of India, Hyderabad.
- Indian School of Business, Hyderabad.
3. It was also decided that further initiative be taken by NFCG on issues like research and case studies, a model whistle blowers’ policy, a corporate governance policy for large institutional investors and corporate governance audit after wide consultations with the stakeholders. The Governing Council also approved the decision of the Board of Trustees to develop linkages with some international organisations keeping in mind the reputation of the Institute and geographical footprint.
4. On this occasion the Governing Council also launched the web site of NFCG viz. www.nfcgindia.org. NFCG will place a discussion paper on corporate governance on this web site to invite comments/suggestions.
5. Shri N. R. Narayana Murthy, Chairman and Chief Mentor, Infosys Technologies Limited was nominated as the second Vice-Chairman of the Governing Council.
6. The meeting of the Governing Council was chaired by Shri Prem Chand Gupta, Minister, Corporate Affairs. Shri M. M. K. Sardana, Secretary, MCA, Shri N. R. Narayana Murthy, Chairman and Chief Mentor, Infosys Technologies Limited, Shri S. K. Munjal, President, CII, Shri N. Srinivasan, Director General CII, Shri C. Banerjee, Sr. Director, CII, Shri Sunil Goyal, President, ICAI, Shri Ashok Haldia, Secretary, ICAI, Shri M. A. Athavale, President, ICSI, Shri N. K. Jain, Secretary, ICSI participated in the deliberations.