In an effort to encourage good corporate governance practices, the Institute of Company Secretaries of India (ICSI) is mooting a proposal to provide incentives to companies having a track record of proper compliance and reporting systems.
In a competitive business environment, the lack of incentives for volunteering to have good practices as part of the business are likely to discourage companies from adhering to clean and transparent practices, particularly when the companies with opaque practices start benefiting, senior functionaries of the institute said.
“There should be some incentive to companies having good corporate governance practices. The incentive can be in the form of some rebate in the bank interest rates or in the form of tax concessions. This incentive package would motivate those who are yet to have a code of governance and encourage the ones with a strict governance practice,” N K Jain, secretary and chief executive officer of the ICSI, said.
The institute has also prepared a set of recommendations, particularly in the wake of the new Companies Bill getting ready. These have been prepared keeping in mind the changing business environment and other issues that came up, particularly after the Satyam scam.
“The recommendations include the issue of number of directorships a person can occupy. There are several issues as far as the compliance is concerned that have to be brought into the Bill. We are hoping that some of our recommendations would get accommodated in the new Bill,” Jain said.
Apart from Price Waterhouse, the auditors of the scam-hit Satyam, the role of company secretaries in the company too came up for debate after the confession of Ramalinga Raju on committing a multi-crore accounting fraud in the company.
However, the ICSI is willing to give a clean chit to the secretarial department of Satyam. “We did an in-house study on the role of the CS in employment and CS in practice. Both of them had done what was expected of them. There is nothing abnormal in the way they discharged their duties. There is nothing on record to show their failure, if there was any. But, the government has gone much ahead with the investigation. If the investigations by the government agencies point at any failure on part of the CS in Satyam, the institute will initiate strict action,” Jain explained.
The ICSI is organising its 37th annual convention in Hyderabad from November 5 to 7, 2009. About 1200 delegates from various parts of the country are expected to participate in the programme. Corporate affairs minister Salman Khurshid would inaugurate the event, where the institute is planning to formally submit its recommendations on the amendments that are required in the Company Law.
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