IFC Brokers Dialogue on Corporate Governance Reform for Indian Enterprises

April 1, 2008 – India’s Securities Exchange Board and IFC’s Global Corporate Governance Forum are promoting heightened dialogue on corporate governance reform among Indian enterprises, engaging business, domestic and international investors, and regulators. The rollout of the Forum’s new Corporate Governance Board Leadership Resources forms part of a program designed to enhance skills and knowledge among board directors.

A recent business dialogue workshop in Mumbai, hosted by the Global Corporate Governance Forum, the Securities Exchange Board of India, and the National Institute for Securities Markets is based on a broader strategy designed to improve key elements of corporate governance reform and capacity building in India.

Recommendations on best practice made by the businesspersons and investors who participated are:

• Director orientation programs that will meet India's need for well-trained independent directors by approximately 10,000 publicly-listed companies. The programs will give directors an opportunity to become current with international best practices on board processes.
• Introduction of a nomination committee mechanism, which will institutionalize the selection of independent directors and ensure high quality.
• Attention to be paid by boards to strategic issues, rather than routine administrative issues.
• Approval of related party transactions by non-conflicted directors should be a minimum standard.
• Thoroughness and quality of disclosure of executive compensation should be upgraded.

Christian Strenger, Deputy Chair of the Forum’s Private Sector Advisory Group says, “The exercise was invaluable in obtaining a perspective of India’s market situation, ascertaining what is working and what isn’t…, assisting the regulator in identifying gaps and evaluating training needs for board directors."

The Forum is working with the Securities Exchange Board and NISM to ensure that the research and recommendations from the workshop will reach appropriate audiences, including the regulators. The Forum, in cooperation with the Reuters Foundation, will also bring its global media program to India, convening workshops to help train financial journalists to report more effectively on issues related to corporate governance.

Contributed by Minakshi Seth, South Asia Division/Corporate Relations.