Ready for the new rules? Governance focus at IR Magazine Forum & Awards – India 2019

By the time India’s IR community gathers for the second annual IR Magazine Forum & Awards – India on June 14, a new set of corporate governance rules will be in place across the country. 

A string of high-profile governance scandals over the past year has prompted the Securities and Exchange Board of India to tighten rules around corporate governance, with the amendments set to come in on April 1.

Nimesh Kampani, head of IR at Kotak Mahindra Bank and a member of the drafting group that worked on the new governance report and recommendations, will be hosting a roundtable at the forum titled Developments in corporate governance policy: What IR and the C-suite need to know. Click to find out more or to book your place.

The new rules will promote ‘a more mature’ approach to corporate governance across Indian companies, Kampani tells IR Magazine, highlighting four areas of the updated code that IROs should pay close attention to, including ‘the requirement to have an independent woman director’ on the board, ‘the enhanced roles of board committees, including the audit committee and nomination and remuneration committee’, and ‘requirements of quorum and the limitations on directorships [that mean] independent directors can do justice to the boards they serve.’ He adds that ‘some of the accounting requirements will also help in increasing transparency.’

Overall, Kampani says boards must take ‘more mature decisions in a timely manner to mitigate or avert the damage.’ They should be better prepared, trained in crisis management and take steps to make sure they don’t ‘get lost in the tyranny of the agenda of goal setting and approving financial numbers every quarter.’

He also has some advice for IROs when it comes to communicating around corporate governance: ‘The key is to be transparent and honest when dealing with investors. In a flat world, real-time communication and timely information-sharing is critical for managing the perception of the company. Investors are much more aware in the digital world and so a more proactive approach by IROs will go a long way in creating a better image for the company and for management.’

As concerns around governance – and wider ESG issues – have grown in India, increased opportunities are also on the cards for those that successfully invest in and promote their ESG credentials. In February, for example, boutique investment firm Avendus Capital began taking money for one of India’s first funds to be based on investment decisions around ESG issues. Avendus said at the time it plans to raise $1 bn over two years with its ESG fund, with about 70 percent of that flow coming from foreign investors.

As well as growing concerns around some of the scandals that have recently rocked corporate India, Abhay Laijawala, managing director at Avendus Capital Public Markets Alternate Strategies, said at the time of launch that ESG was no longer simply the focus of select investors. 

‘Traditionally, university endowments and pension funds have tended to participate in ESG. But we are now seeing a lot of appetite also from millennial, high-net-worth investors and family offices,’ he said in a statement. ‘The compelling news flow around climate change and work-related issues is driving this shift.’