Sensex companies slip on corporate governance standards: Report

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Published: December 12, 2019 4:42:45 AM

The report that was co-authored by the BSE evaluated a total of 150 companies on various parameters of corporate governance including effective corporate governance framework, rights of shareholders and transparency.

Stock Market Live updates, bse sensex, nse niftyThe report has also documented the effectiveness of the skill-sets of company boards. (Image: PTI)

A report by the International Finance Corporation (IFC) and Institutional Investor Advisory Services (IIAS) said corporate governance standards have fallen marginally among companies listed on the Sensex when compared to last year. In 2019, 10% of the companies that were evaluated come in the top-scoring bracket when compared to 13% last year. Sectorally, information technology scored the highest, followed by the consumer staples and financial sectors.

The report that was co-authored by the BSE evaluated a total of 150 companies on various parameters of corporate governance including effective corporate governance framework, rights of shareholders and transparency.

“We noticed that MNCs and widely-held companies did better than promoter-held companies,” Hetal Dalal, COO of IIAS, said. Despite macroeconomic headwinds, the companies have managed to perform well, he added.

The report has also documented the effectiveness of the skill-sets of company boards. From the companies evaluated in the BSE 100, 41% had adequate skill-sets required for the board, while the score among IPOs was lesser with only 26% of companies having adequate skill-sets for the board. “What we are pushing for is to see whether the (company) boards have a director who has adequate technology expertise,” Dalal said.

The companies considered under IPOs were those that were listed between April 2015 and March 2017.

Dalal also said IPO companies had scored poorly when compared with BSE 100 and the Sensex. The median score of IPOs was 54, compared with 57 of BSE 100 and 61 of the Sensex. “We believe that (IPO) companies need time to adjust to the new paradigm of being listed and being held accountable to a larger set of stakeholders,” the report said.

Cipla, Hindustan Unilever, Tata Power, Tata Motors and Dr Reddy’s Laboratories were among the top performers of the Sensex. Among IPO companies, ICICI Pru Life, Narayana Hrudyalalya and Syngene International scored the highest.

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