Sebi expects more power to penalise defaulters: Damodaran

Sebi Chairman M Damodaran on Friday said that the market regulator is expected to get more powers to penalise defaulters.

Delivering his keynote address at a seminar 'Making corporate boards work', organised by CERG Advisory, he said, "Sebi may be armed with such powers to levy such heavy penalties that penalties imposed now may look like peanuts."

In his tough, but witty address, the Sebi chief added that despite the regulator's best efforts, some companies may try and exploit loopholes.

"In the coming year, we may conduct a random check of say 20 companies for compliance with Clause 49 (on corporate governance) and come down heavily on 4-5 defaulters."

Even as the regulator made it clear that it can become a powerful adversary if forced to, Business Standard editor and publisher, TN Ninan, who was moderating the session, raised an important question, "Who will regulate the regulator?"

Damodaran replied that Sebi, on its part, is learning to run its business in a better way and is open to suggestions.

Explaining the tough job of a regulator, he remarked that even as Sebi continues to plug loopholes, defaulting companies have to ultimately answer their stakeholders. Yezdi Malegam, managing partner, SB Billimoria & Company, pointed out that boards need to make a distinction between accountability and responsibility.

"They have to realise that corporate governance is not only a legal mandate but also a social mandate," he added.