India Inc's mettle to be tested with voluntary corporate governance norms
India Inc’s corporate governance mettle will soon be put to the test with a stricter framework.
Sources said the country’s largest bourse, the National Stock Exchange (NSE), will unveil governance and disclosure norms next week that will be more stringent than what is prescribed under the Sebi (Securities and Exchange Board of India) Regulations or the Companies Act.
Adhering to these norms will be entirely voluntary and won’t impact the listing status of any company.
Companies that meet the higher standards will earn a special tag or will be clubbed differently, to help investors distinguish them.
Given investors’ preference for companies with high governance standards, those in the club might command higher valuation or greater institutional participation, said industry players.
“It is a good initiative. However, it may take some time to gain wide acceptance among Indian companies. We need to see how companies adapt to it. If it takes off, it will become an aspirational thing,” said Shriram Subramanian, founder and managing director of InGovern.
Brazil has successfully implemented a similar measure where it has created a new listing segment called Novo Mercado (New Market) for companies that voluntarily commit to adopt corporate governance practices outside the law.
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