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Key investors can ensure good corporate governance: Bhave

The Securities and Exchange Board of India Chairman, CB Bhave, called for shareholder activism, particularly by institutional investors, in ensuring good governance in companies.

business Updated: Feb 06, 2009 10:52 IST
HT Correspondent

The Securities and Exchange Board of India (SEBI) Chairman, CB Bhave, on Thursday called for shareholder activism, particularly by institutional investors, in ensuring good governance in companies.

“Non-promoter shareholders, more importantly institutional shareholders, need to get more active,” said Bhave, while dwelling on the fraud committed at Satyam Computer Services Ltd by its founder B Ramalinga Raju. He was speaking at the Confederation of Indian Industry’s (CII) fourth Corporate Governance Summit.

Bhave suggested that every institutional shareholder could make a beginning by placing in public domain records of their voting on resolutions passed by shareholders.

The role of non-promoter shareholders, particularly institutional shareholders, was listed by the SEBI chief as one of the four issues that need to be addressed over the medium term. The other issues were whether there is a need for rotation of statutory auditors, is it necessary that companies engage external auditors for conducting internal audit and the need to strike the right balance in regulatory interventions to avoid excessive regulation.

Bhave said the National Institute of Securities Markets and CII are starting a course for directors of companies, particularly independent directors, to fill the gaps in terms of what tasks the directors need to perform.