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IFCs study shows improved Corporate Governance standards in BSE 100 companies
Posted on: 20/Feb/2018 6:38:53 PM
IFC, a member of the World Bank Group; BSE & Institutional Investor Advisory Services India Limited (IIAS), an advisory firm focused on corporate governance research, have found improvement in governance standards of Indian companies over the last one year. The Corporate Governance Scorecard for 2017, a study done on companies forming the S&P BSE 100 index, constituting 67 percent market capitalization of the stock exchange, aims to increase transparency and provide confidence to investors globally.
The study suggests that more than 90 percent of the Sensex 30 companies have ameliorated in providing adequate disclosures & inducting more women directors. Additionally, the number of Sensex 30 companies giving detailed minutes of the Annual General Meetings, disclosures on succession planning and facilitating shareholder participation doubled in the last one year. The BSE 100 companies have improved on information standards with scores ranging between 85 and 50.
“Companies have scored over 80% in each of the four scoring categories, but no one company has scored well across all categories. This shows that while there is room for improvement, a high score is achievable,” said Amit Tandon, Managing Director, IIAS.
The Corporate Governance Scorecard tool, launched in December 2016, based on G20/OECD principles of Corporate Governance, aims to help companies identify areas of improvement against best practices and promote effective decision making. Some other key insights of the study include better governed companies having relatively lower stock volatility and institutionally-owned companies having better governance scores as compared to other forms of ownership.
Speaking on this occasion Shri Ashishkumar Chauhan, CEO & MD, BSE said “We at BSE have always stood for maintaining highest levels of transparency and adhering to corporate governance, in our bit to giving back to the society. Corporate Governance ensures transparency which ensures strong, balanced and integrated development, ensuring the best interest of all stakeholders”
Increasing investor scrutiny and significant steps being taken by various regulatory bodies demonstrate the changing governance standards in India. IFC works with private-sector companies in emerging markets to facilitate board robustness and promote sustainable practices that can help in the growth of a company over a period of time. The 2017 Scorecard highlights several areas of improvement for Indian companies including better clarity on effectiveness of policies, improvement in board effectiveness, and enforcement of shareholder rights.
“The Scorecard is a part of IFC’s commitment to support companies globally by strengthening governance structures and increasing transparency for investor confidence,” said Vladislava Ryabota, Regional Lead for Corporate Governance in South Asia. “The improvement in governance scores show that Indian companies recognise the importance of good governance and are going the extra mile to achieve it”
IFC has a portfolio in Corporate Governance of over US $43 million with 23 active projects across the globe. Working with over 1000 companies, IFC’s dedicated corporate governance experts have provided advisory services that helped over 200 companies improve their corporate governance practices and these companies could attract capital of over 6 billion dollars. IFC’s South Asia Regional Corporate-Governance Project, implemented with donor support from Japan’s Ministry of Finance, helps strengthen boards through knowledge sharing and trainings.
