Corporate Governance - Time for Revamp

More disclosures in quarterly and annual financial statements.

Corporate governance refers to the conduct of the Board of Directors. Practice of high quality corporate governance is indispensable for building investor confidence and for sustained growth. Performance Orientation : The principal objective of business enterprises is to enhance economic value for all shareholders by making the most efficient use of resources. Nomination and Compensation Committees : A compensation committee should set the compensation policy for directors and senior management, commensurate with performance measured against comparable industry benchmarks and key performance indicators such as economic value added. Disclosure : To ensure transparency, companies’ annual reports should disclose true and fair accounting information prepared in accordance with applicable standards. Audit Committee : Audit committees are more effective when they are composed solely of independent directors, at least two of whom should have the requisite knowledge of accountancy, financial analysis, and financial reporting; at least one member should have a good understanding of the business of the enterprise; have a written mandate and terms of reference. Code of Conduct : All enterprises must have a written code of business conduct and establish systems to ensure that it and all applicable laws are followed in letter and spirit. Conflicts of Interest : Actual and potential conflicts of interest should be identified, disclosed, and explained in sufficient detail to enable valid judgments to be made on their adverse impact. Conduct of the Board of Directors: Directors are expected to preserve and enhance shareholder value.

Auditors should be randomly picked from the pool of auditors and rotated regularly.

When promoters allot themselves shares/warrants the valuations are not explained to shareholders. The price at which the warrants will be allotted should be put on open offer to others whoever wants to subscribe at the price of allotment to promoters.

Promoters should also disclose the source of their funds for subscribing to preferred allotment.