‘Corporate governance will become more equitable’

ARUN M KUMAR, chairman and chief executive officer, KPMG in India, and one of the members of the committee on corporate governance, shares with Sudipto Dey, implications of some of the key recommendations. Edited excerpts:

How will board dynamics change if all the recommendations are accepted?

Corporate governance is a field where you have to move forward through evolution rather than revolution. The committee has made a number of recommendations that relate to independent directors and board engagement, among others. These will help to make corporate governance more equitable for minority shareholders, as well as create longterm value creation for all shareholders.

How much of a step-up in terms of compliance will these recommendations entail?

I don’t think the requirements are onerous. Of course, there are requirements for the board to meet five times a year, with at least on one occasion the focus should be on long-term value creation. The committees (on the board) should have adequate number of independent directors. To get in line with the recommendations a time frame has been laid out going forward, so that the ones that are easy to do are done quickly, while the ones that take longer could take some time.

When it comes to public sector enterprises, the general feeling is that no one wants to acknowledge the elephant in the room — the government — which calls the shots when it comes to appointments.

The terms of reference of the committee were to look at corporate governance in listed entities. The committee has recommended that all listed entities should follow the same norms (irrespective of ownership).

How has the equation changed for the promoters?

In a way we have defined that promoters with access to certain information should be treated as insiders with regard to use of that information.