Govt bodies need better monitoring: Ambani

The presence of a specific number of independent directors on the board of directors of a company will not lead to good corporate governance, according to Anil Ambani, Chairman and Managing Director of BSES.

Speaking at the Institute of Company Secretaries of India Corporate Governance Awards function, Ambani said, "It is unfair that the corporate entities are burdened with additional strictures when the government bodies are not monitored".

He said government bodies, unlisted companies, regulators and institutions should also be within the ambit of the corporate governance regulations and added that the system of corporate governance ratings should be used to regulate unethical corporate practices.

Speaking on the occasion, G N Bajpai, chairman, Securities and Exchange Board of India, said even though India had achieved high standards of corporate governance it did not mean that it should get complacent. He added that Indian companies should keep on trying to improve its standards further.

Ambani said good corporate governance could not be achieved in a clinical fashion by specifying rules, which the companies had to adhere to.

For instance, as international experience showed, companies that had the largest number of independent directors were also a part of the largest financial scams.

He said corporate governance was all about the mindset and added that the urge for establishing ethical practices in the organisation came from within.

Under Clause 49 of the proposed listing agreement of Sebi, half of the board of any company should comprise independent directors.

Speaking on the other aspects of the listing agreement, Naina Lal Kidwai, executive vice-chairman and CEO, HSBC Securities and Capital Markets (India) Private Ltd, said the board should be given the power to decide whether the pecuniary relationship with the supplier was affecting the independence of the director.

The Clause 49 of Sebi's listing agreement stated that a supplier having monetary relationship with the company could not be the independent director of the company.

She also pointed out that the nominee directors should be subject to same set of rules and selection procedures which the independent directors faced.

She, however, admitted that some sort of training or acknowledgement of expertise was required before a person came into the board as an independent director.