MUMBAI Feb 13 India's market regulator on
Thursday approved a new corporate governance code aimed at
improving transparency and disclosure standards of listed
companies in India.
Providing more clarity on how Indian companies are run is
part of the Indian government's agenda to attract retail
investors back into stocks. These investors have been heavy
sellers since 2008 because of lack of trust in India's volatile
The changes, due to come into effect from Oct. 1, would make
it mandatory for companies to put in place a whistleblower
policy, which would establish a process through which employees
can report to management concerns about unethical behaviour,
or suspected fraud or violation of the company's code of conduct
or ethics policy.
The code also requires companies to disclose how they decide
remuneration for their top management.
It also puts restrictions on the maximum number of boards
that one individual would be allowed to sit on and also makes it
mandatory for at least one woman to be represented on a
company's board of directors.
The rules are in line with India's new companies law that
was ratified last year and was designed to enhance shareholder
The Securities and Exchange Board of India (SEBI) has
stepped up its rules to protect small investors as well as to
reduce the power held by so-called "promoters" of a company, or
key stakeholders who have a disproportionate say on management
appointments and day-to-day operations.
Last year, SEBI asked stock exchanges to beef up their
compliance departments to ensure that companies make proper
disclosures of market sensitive information, while a new insider
trading law is also in the works.
Also on Thursday, SEBI proposed new measures aimed at
helping India's mutual funds industry, including higher tax
incentives for equity funds and a proposal to allow India's
state-owned pension fund to channel money into mutual funds.
India's domestic equity funds have seen net redemptions of
310.14 billion rupees ($4.96 billion) since April 2008.
(Reporting by Himank Sharma. Editing by Jane Merriman)