Need to improve corporate governance and identify products to monetise gold, experts tell Sebi

"The honesty and practice of conversations at the boards of promoter-led Indian companies are not high," corporate law expert Cyril Shroff said at the FICCI 23rd Annual Capital Markets Conference.

Speaking at a session on whether corporate India needs to rethink regulations and rewrite the rulebook, Shroff said, "The quality of a deeper conversations at the boards is poor. A lot of conversations happen outside the boardroom. If an independent director has a problem with something, the chances of confronting the board or the management at the board meeting are very low."

"These conversations should have happened in the framework of the board. The efficacy of the Nomination and Remuneration Committee (NRC) is also questionable sometimes. The NRC is expected to debate and come up with names for selection. But in reality a selection of a candidate might be made, meeting the technical criterion and then it goes for rubber stamping to the NRC. This may not always happen, though," Shroff said.

Corporate India continues to see structural challenges at the boardroom level, where promoters and family-owned businesses often dominate conversations and decision making within the board.

Shroff, who the managing partner of legal firm Cyril Amarchand Mangaldas, has in the past been on the board of some prominent Indian companies, which included Grasim and Kotak Mahindra Bank. He is also the chairman of FICCI Corporate Governance & Corporate Laws Committee.

Shroff also said there is inadequate scrutiny of financial statements at the board level. He was responding to questions raised by Sebi's Whole-Time Director Amarjeet Singh, who was the moderator and session chair of this FICCI session on relooking at regulations. Taking about corporate governance in general, Shroff said: "We have come a long way over the past few decades, but there is still a long way to climb [up the mountain," he said.

Nilesh Shah, who is the part-time member of the Economic Advisory Council to the Prime Minister (EAC-PM), said that a mutual fund product which can monetize the vast amount of gold and silver which India uses should be considered. "The time has come to move India’s retail savings from gold to financial assets,” Shah said, while commenting on new financial products which the regulator should consider introducing.

Kaku Nakhate, chair, India BofA Securities India said the problems with regulations in India is that "we change, little by little by little. But in today's time, people must change systems. These require technology dollars. We should give a one-year papers of what [regulatory] changes are likely to be introduced." She said India must increase its focus and create the market for ETFs.