“Is the system of corporate governance in the country working satisfactorily…The majority would say no,” Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said while addressing the annual session here of industry chamber, the Confederation of Indian Industry (CII).
Commenting on Indian company ownership patterns Tyagi said, “50% ownership is with the promoters, while institutional investment is increasing, nowadays touching 30 per cent”
“What are their responsibilities, once they are significant shareholders? Our impression and this is the saddest part, is that promoters prefer institutional investors who are passive,” he said.
“There is a need for a common stewardship code. Just increasing the institutional share, without taking active interest and responsibility, does not serve corporate governance,” he added.
About the investor’s rights which are definitely one of SEBI’s point of concern, the Chairman said: “If promoters’ plus institutional shareholding crosses 80%, then retail, minority investors really become a minority…who will take care oStheir interests?”
“Then there is the issue of independent directors, who have not been discharging their functions properly. They have no commitment to any cause, resign without giving any reasons, just say they are sick…giving fake reasons.”
“These are issues of serious concern, to which I have no solutions at the moment,” Tyagi added.