India Inc wants stronger SEBI regulation: KPMG report

Corporate India is batting for a stronger regulatory framework and wants market regulator Securities and Exchange Board of India (SEBI) to fortify Clause 49 of the Listing Agreement, in order to improve corporate governance, global audit and advisory firm KPMG said in a report.

Under Clause 49 of the SEBI Listing Agreement, all listed companies in the country are required to reserve half their boards for independent directors if the chairman is an executive director.

The KPMG report followed an opinion poll among corporate chief executives, chief financial officers, independent directors and business leaders from various sectors, including private equity, banking, insurance and securities and transport. 

A majority of the industry leaders polled were of the opinion that the SEBI regulatory framework needed changes. While 44 per cent of the respondents suggested major revamp of Clause 49 of the Listing Agreement, 46 per cent felt that the clause required only minor changes, the KPMG report said.

SEBI, through Clause 49 of the Listing Agreement has redefined the role of independent directors, increased the responsibilities of audit committees and improved the quality of financial disclosures.

Company boards are also required to get financial statements certified by CEO/CFO for improving disclosures to shareholders. However, the clause has not helped bring in major changes in corporate governance in the country, the report said.

The need for stronger corporate governance has been felt in the backdrop of the current financial turmoil, brought about by poor governance system and a general lack of financial discipline and supervision, KPMG said in its report.