Corporate governance: Our rules here are actually among the global best

ACCA-KPMG survey shows India leads BRICS in these, ties with Australia in 4th place, with China well down

India leads the BRICS (the Brazil, Russia, India, Chian and South Africa grouping) markets in corporate governance ranking.

It occupies fourth place, ahead of Russia (seventh) Brazil (ninth), South Africa (11 th ) and China (19 th ), in a report titled  Balancing Rules and Flexibility,  a study by ACCA-KPMG on corporate governance requirements across 25 markets globally.

Among the 15 developing nations included in the survey, India and Malaysia lead jointly, occupying the same fourth place.

America, Britain and Singapore are the top three scoring markets, with clear and extensive corporate governance requirements. Australia, India and Malaysia are jointly ranked fourth. Hong Kong and Russia are tied at seventh. Brazil and Taiwan are the other two countries to feature among the top 10 markets.

Those with the lowest score are Philippines, Indonesia, Canada, China, Cambodia, Japan, Vietnam and Myanmar, followed by Brunei and Laos.

The report is aimed to address gaps in corporate governance practices, and help board directors, regulators and risk management practitioners understand the similarities and differences in governance requirements.

Commenting on this country’s performance, Richard Rekhy, chief executive officer, KPMG in India, said Indian regulators had taken significant steps to raise the bar on governance. They’d brought in a paradigm shift in corporate governance requirements, both in the Companies Act, 2013, and the recently revised Clause 49 of the listing agreement laid down by the Securities and Exchnage Board of India.

“The changes relating to the role and responsibilities of the audit committee, the roles of independent directors and the codified duties of directors as a whole, are leading to a shift in boardroom dynamics,” he said. This has triggered a mindset change in how key players in the governance framework engage with other stakeholders, including  minority shareholders, he added.

Overall, the study found a wide divergence in corporate governance requirements across the 25 markets, analysed on clarity, degree of enforceability and prevalence of instruments. Decisions to develop, define and enforce these requirements within a particular market depend on the political, legal, economic, social and cultural aspects within each -- there is no ‘one size which fits all’. Even so, “there is value in continuing to capture internationally recognised standards of corporate governance”, the study said.

It found that most markets -- 76 per cent -- had revised their corporate governance codes since the global financial crisis in 2008. Russia, India, Australia and Britain revised in 2014. Markets which have not updated themselves include Indonesia (since 2006), Korea (since 2003) and China (since 2001). A majority, 16 of the 25 studied, have adopted a little over 80 per cent of the corporate governance principles suggested  by the Organisation for Economic Cooperation and Development.