Listed companies will soon have a new Corporate Governance Code, requiring them to justify high executive salaries, putting in place an orderly succession plan and adopting a whistle-blower policy.
The Corporate Governance Code is being put in place after taking into account public comments to draft corporate governance norms released by capital markets regulator Sebi earlier this year as well as the related provisions in the new Companies Act, 2013.
"The new Companies Act has brought in a new dimension and a lot of clarity from corporate governance point of view," Sebi Chairman U K Sinha said.
"Our discussion paper on corporate governance is already in public domain for quite some time. We will be now taking a call on that," he added.
The discussion paper was floated in January and the draft norms also seek to grant greater oversight by minority shareholders and independent directors and check any unjustifiable payments to related parties.
It has also proposed to introduce a new concept of 'Corporate Governance Rating' by independent agencies to monitor the level of compliance by the listed companies, in addition to regular inspection by Sebi and stock exchanges.
While Sinha did not disclose the details of final set of regulations in this regard, he said that corporate governance has been one of the key focus areas for Sebi over the past one year and the regulator is looking to further enhance the compliance standards of listed companies.
While Sebi has already taken a number of steps in areas of corporate governance and investor protection, the next step would be putting in place final norms emanating from the draft regulations proposed in January this year, he added.
The 54-page discussion paper also talked about a greater alignment of CEO salaries with the performance and goals of the company, as also a mandatory disclosure of ratio of remuneration paid to the each of their directors and their median staff salary. Similar provisions have been made in the new Companies Act.
The paper said that "on average, the remuneration paid to CEOs in certain Indian companies are far higher than the remuneration received by their foreign counterparts and there is