SEBI proceeds against 20 cos - BL

SEBI proceeds against 20 cos for not complying with Clause 49 norms

Our Bureau

Mumbai, Sept. 11 The SEBI has initiated adjudication proceedings
against 20 companies for non-compliance with corporate governance
norms under their listing agreement with the stock exchanges.

Adjudication proceedings are in the nature of seeking clarification
from the companies on the information submitted by stock exchanges
in their quarterly reports on compliance with Clause 49 of the
listing agreement (which deals with corporate governance).

While SEBI did not identify the companies being proceeded against,
Mr Pawan Kumar Bansal, Union Minister of State for Finance, had told
the Rajya Sabha in May that for the quarter ended March, 13 of the
104 companies in the BSE `A' group had not complied with Clause 49
stipulations.

In the case of the Nifty, seven of 50 companies are yet to comply
with the guidelines.

Welcoming the SEBI move, Mr Deepak Parekh, Chairman of HDFC,
said: "Unless the regulator takes action against those who do not
comply with its regulations, there is no meaning in having such
regulations. [Apart from the penalty]... the regulated entities should
fear that violations of regulations could tarnish their reputation."

"It is an expected development," said Mr Santosh Nair, Partner
(Business Risk Services) at Grant Thornton.

"It shows that the SEBI has moved into the next phase of
implementation and institutionalisation of corporate governance
norms in India."

Twenty months is long enough for the companies to adhere to the
norms, he added.

Five of the 20 entities are public sector companies who have not
complied with provisions related to board composition, the SEBI said
in a statement on Tuesday.

Of the remaining 15 companies, which are in the private sector,
three have been proceeded against for non-compliance with "almost
all the major provisions of Clause 49," the SEBI said.

The major provisions relate to composition of board, constitution of
audit committee, disclosure on related party transactions and
utilisation of issue proceeds.

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