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The current framework for disclosures and the maintenance of corporate governance standards remain centered on the active responsibility of independent directors and company management, said SEBI Chairman Tuhin Kanta Pandey.
Speaking to the media on the sidelines of the CII 19th Corporate Governance Summit in Mumbai, he noted that while regulations provide the necessary structure, the quality of governance is determined by the capability and diligence of those overseeing the process. Pandey emphasized that the trust of shareholders and customers fluctuates based on how a company handles its internal insights and risk management. He pointed out that the regulator monitors financials and governance practices, but the primary duty of ensuring transparency lies within the board. He suggested that constructive discussions within the board are essential whenever management needs to explain specific developments. "Even today, I have said that it is the responsibility of independent directors. It is a very important responsibility. It is the responsibility of the management. Management's information, insights, governance, not just compliance, but also risk management, financials. We look at them. Along with looking at them, we take responsibility. If the management has to say something or explain something, there is a discussion in the board about it. There should be a discussion in the board about these things," Pandey said. The Chairman explained that stakeholders and shareholders are inevitably impacted by a company's performance or any significant decline in market capitalization. "The disclosures have a framework. There is a disclosure within that framework. And if there is a complaint in those disclosures that there has been no internal disclosure, then there is a separate process for that. I have told you that the information about a disclosure and the number of hours and materiality of the information is defined in a framework. There are disclosures within that framework," he added. Pandey used an analogy involving university degrees to illustrate that the existence of a curriculum or regulation does not automatically guarantee a high-quality outcome. "Now, what is the quality of the degree? It depends on how the examiners are, how hard they are working. So, the framework is the same. The degrees of one university are considered very valuable and prized. A particular university's degree is not considered so. Even if there is a VC, there is an academic council, there are regulations, there are all the same things. So, why are they different? It means that capability cannot be defined only by regulation," the Chairman stated. He stressed the need for continuous improvement in corporate governance rather than settling for compliance. He noted that the industry must constantly study and seek new ways to strengthen risk management capabilities to stay ahead of emerging challenges. (ANI)
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