Mumbai: Compliance of corporate governance norms need to be made more practical if they are to be complied with "in spirit" rather than "only the letter of the law."
A recent study bears this out as it revealed that most companies are finding it difficult for instance to comply with the transparency norms while dealing with auditors.
Queried about this, Kalpana Unadkat, partner, Khaitan & Co, who advises foreign investors on their investments in India and corporate governance issues, said there is a major issue related to Independent directors for instance, when it comes to evaluating board members.
The majority of times it’s a tick box exercise and few take it seriously. "It’s still an old boys club. The compliance officer says it take a lot of time to evaluate all directors."
Her experience as an independent director has "been good. One has duties. No one, for example, can turn up without reading the documents sent to them," she says.
However whilst the UK for instance has regular training for independent directors and head hunters for the selection of independent directors in India there is a nomination committee but 80 per cent selected are not really "independent".
Pranav Haldea, the managing director of PrimeDirector.com, says "no one wants a complete stranger on the board. And this is true even abroad. Invitations are often given on strong references."
Some other cumbersome compliances required are the 19 compliances needed by listed companies on the BSE; the ministry of corporate affairs has five ongoing compliance e-forms to be filed excluding filing of activities undertaken by the company. There are also 12 statutory filings required under the labour laws. These are only some of the compliances.