Mumbai: Enthused by a growing awareness among investors about their rights, capital markets regulator SEBI's Chairman U K Sinha Tuesday said that a large number of proposals made by promoters and management at listed companies are getting defeated by the shareholders.
He also pitched for a 'responsible business' regime, while laying down three guiding principles of shareholder democracy, transparency in operations and protection of minority investors to achieve this goal.
Speaking at an event here, Sinha said that there is a lot of interest in e-voting by shareholders of listed companies while proxy advisory firms have also begun playing a key role.
"It is just a few months old pheneomenon in India, but e-voting has already brought in dramatic improvement and nobody can imagine the number of proposals that are getting defeated by the shareholders," he said.
Talking in the global context, the SEBI chief said that the financial crisis has shown to the world that the trust that was bestowed on the corporate leadership was broken.
He further said that it has emerged that the compensation system for top executives was made while keeping in mind short-term goals rather than the long-term objectives.
"I'm also reminded of the OECD principles. ... G-20 and the FSB have prescribed that the OECD principles are the key standards not only for the governance of corporations but according to them, they're key to financial stability in the world.
"Look at the seriousness which is being attached to these principles," he said.
Paris-based Organisation for Economic Cooperation and Development (OECD) is tasked by global bodies like G-20 and FSB (Financial Stability Board) with the job of framing financial market policies and regulatory standards for the regulators across the world.
"Right now, the principles are under revision and a discussion paper has been floated," he said, while adding that some of the ideas presented in the paper include further checks on related party transactions, greater disclosure of beneficial ownerships.
Additional disclosure requirements are being proposed for bringing more transparency, while other proposals include those related to grievance redressal mechanism for minority shareholders.
"Importantly, the revised proposals which are under discussion at OECD also talk about having an impact assessment of the regulatory practices. This is another key element which has been proposed.
"I'm sure that after the public discussions are over, these new principles will be in place very soon and am sure most of the countries will be too happy to adopt it," he added.
