Sebi, other regulators seek to strengthen corporate governance

Capital markets watchdog Sebi and its counterparts in emerging nations are seeking to strengthen corporate governance frameworks.

International Organization of Securities Commissions' (IOSCO) Growth and Emerging Markets Committee today published its report on 'Corporate Governance in Emerging Markets' that focuses on board composition and responsibility; remuneration and incentive structures; and risk management and internal controls.

It also identified possible measures and regulatory approaches aimed at strengthening corporate governance in such jurisdictions and aligning regulatory frameworks with internationally recognized standards in this area.

The report is the first review of its kind by securities regulators on current corporate governance practices in emerging markets benchmarked against the revised G20/OECD principles of corporate governance (OECD Principles).
 

It reflects that the regulatory frameworks in emerging market jurisdictions are generally aligned with the recommendations of the OECD Principles.

"There is also broad agreement on the direction emerging market regulators should take to improve the quality and accountability of boards, ensure that remuneration and incentive structures are designed to create long term value, and improve the risk management frameworks and internal controls of corporations," the report noted.

In addition, it has identified further initiatives and approaches for raising the bar regarding the implementation of best corporate governance practices, including encouraging greater board diversity and quality reporting of sustainability, social responsibility and cyber risks.

"The report is an important and timely assessment of the progress of emerging markets in aligning their regulatory frameworks and practices with global standards. It makes useful recommendations to address issues associated with corporate governance in emerging markets," Ranjit Ajit Singh, Vice Chair of the IOSCO board and Chair of the Growth and Emerging Markets Committee said.

"It also demonstrates the commitment by emerging market regulators to enhance corporate governance standards and reinforce resilience in their markets," he added.

The report is based on a comprehensive survey across regulators, exchanges, listed companies, institutional investors and other stakeholders on corporate governance practices in emerging market jurisdictions.