Interactive Session with Mr. Salman Khurshid, Hon' able Minster for Corporate Affairs and minority affairs and Round table on Corporate governance

Brief Report
At the special interaction with Mr Salman Khurshid, Minister for Corporate Affairs and Minority Affairs on 4 July 2009 at New Delhi representatives from India Inc deliberated on the architectural composition of good governance in India.
Addressing the august gathering, Mr. Khurshid emphasized the need of engendering good corporate governance and building a good corporate governance framework in the country which is implemented both in letter as well as spirit.
During discussions, industry members emphasized that there was no need to introduce more regulation on corporate governance code and the basic framework should include the concept of ‘trust and verify’. Also given the vast diversification of Indian Incorporations, ‘one size fits all’ cannot be practiced vis-à-vis corporate Governance norms. It should be taken into account that different organizations, have different sizes and are exposed to varied levels of risks, therefore they should be treated differently.
TThe role of independent directors was also emphasized during the interaction and the need for delineating their definition, function, responsibilities and liability was stressed. The gathering concurred that Independent Directors should also be held accountable and they should not be completely immune from liability. However, instead of criminal liability, a shift to civil liability should be considered. Commenting on the mode of selection of independent directors, it was stated that retired people are not always the best options and the pool from which Independent Directors are drawn should also include practicing professionals for a well balanced board.
For strengthening of the audit process, statutory auditors would need to take up more responsibility for the veracity of the information being audited and have a qualitative interface with the internal auditors. Internal monitoring and auditing should be exclusive of the board’s interference giving them more opportunity to report discrepancies.
Suggestions for structuring the board of directors were free flowing, and the major ones indicated to adopt the RASCI - Responsible, Approve, Support, Consult, Inform - model for identifying the role and responsibility for the Board of Directors. A two-tier concept of the Board could also be considered, i.e. Supervisory Board and Executive Board, thus making the Executive Board more accountable. Ethical education should be provided from the nascent level and it must be accepted that the responsibility of corporate governance compliance lies on the board and management. More accountability, transparency and better disclosures should be encouraged.
Affirmative action was discussed as one of the agendas that should be considered by the company’s board. It was suggested that the companies complying with Affirmative Action should be given some incentives and preferences.
An idea of a special court set up to deal with corporate frauds was also mooted during discussions.
The Minister stressed that the Government and the Industry, collectively need to establish Corporate Governance benchmark and create a positive influence on the governance levels in the larger social fabric of the country.