Gatekeepers of Governance 2024, the 9th Annual 2 day Corporate Governance Summit, was held on November 21-22, 2024 at the Trident Hotel, Bandra Kurla Complex, Mumbai. It brought together leaders to address challenges and opportunities in the area of corporate governance. Organized by Excellence Enablers Private Limited, this prestigious event served as a platform to exchange ideas and solutions for fostering robust corporate governance practices. The discussions during the Summit focused on key themes and topics, as outlined below.
The Summit opened with an inaugural session titled “Regulators – Friends, Foes, or Frenemies?” featuring eminent speakers such as Mr. M. Damodaran (Chairperson, Excellence Enablers, Former Chairman, SEBI, UTI and IDBI), Justice P. S. Dinesh Kumar (Presiding Officer, Securities Appellate Tribunal; Former Chief Justice, Karnataka High Court), Mr. M. Nagaraju (Secretary, Department of Financial Services, Ministry of Finance, GOI), Mr. K. Rajaraman (Chairperson, IFSCA; Former Secretary, GOI), and Mr. Ashwani Bhatia (Whole Time Member, SEBI). The discussion was on the relationship between Regulators and businesses, highlighting the dual role that Regulators play in easing business processes, while ensuring compliance. Regulators act as allies by creating fair and transparent frameworks, but are often seen as adversaries due to the perceived burden of compliance costs and stringent norms.
Ultimately, the key to a healthy relationship between Regulators and businesses lies in striking a balance. Regulators must be flexible and adaptive, understanding the challenges and needs of the regulated universe. On the other hand, businesses should engage constructively with Regulators, providing feedback and collaborating on solutions that meet regulatory goals without limiting innovation.
SMEll Tests in Governance
The panel included Mr. Nilesh Shah (MD, Kotak Mahindra AMC) and Mr. S. Ramann (Deputy Comptroller and Audit General of India; Former CMD, SIDBI; Former MD & CEO, NESL). It delved into the governance challenges faced by SMEs, where disparities in compliance and governance standards are evident. The key takeaways were that governance quality depends on mindset, not size. Regulators should focus on non-compliant entities, thereby allowing compliant SMEs to thrive, while improving overall governance.
Boards – Have They Failed Stakeholders?
Experts like Mr. Mukesh Butani (Founder & Managing Partner, BMR Legal Advocates; Member, Global Supervisory Board, International Fiscal Association), Ms. Pallavi Shroff (Managing Partner, Shardul Amarchand Mangaldas & Co.) and Mr. M. Damodaran discussed whether Boards have adequately protected stakeholder interests. The discussion focused on the gap between rising expectations and board performance. Boards must act decisively on whistleblower complaints, executive resignations, and other red flags. Effective succession planning, equitable committee workloads, and a focus on stakeholder interests, not just shareholders interest, are critical to meeting their increasing responsibilities.
ESG – Do Good Opportunity or Feel Good Scam?
Panellists Mr. D.P. Singh (Deputy MD & Joint CEO, SBI Funds), Dr. Mukund Rajan (Chairperson, ECube Investment Advisors; Former Chief Ethics Officer & Brand Custodian, Tata Group), and Mr. Vikram Singh Mehta (Distinguished Fellow, Centre for Social and Economic Progress; Former Chairperson, Brookings India; Former CEO, Shell India) addressed the issues in the ESG space. They raised the question whether it drives meaningful change or is merely a tick-box exercise. ESG should be more than just following rules on paper—it needs to create real value by promoting sustainable and responsible business practices. Big companies can handle ESG costs more easily, but for smaller businesses, it can be a strain. So we need to see if it is making a real difference. The related point was while E, S and G were desirable pursuits, clubbing them as ESG did not seem appropriate.
Do Managements Also Run Business?
With perspectives from leaders like Mr. M. Damodaran, Mr. Amish Mehta (MD & CEO, CRISIL) and Mr. Tapan Singhel (MD & CEO, Bajaj Allianz General Insurance Company, GIC), the session delved into whether the heavy compliance burden has diverted managements from their core responsibility i.e. running business. Boards must prioritize strategic discussions, while not ignoring compliance matters in meetings, enabling management to focus on operations. Effective corporate governance should complement, not substitute strategic leadership.
Do Auditors Need Auditing?
With insights from Mr. D. Sundaram (Vice Chairperson & MD, TVS Capital Funds; Former Vice Chairperson, HUL), Mr. Jamil Khatri (Co-Founder & CEO, Uniqus Consultech; Former Head of Audit, KPMG) and Mr. P.R. Ramesh (Former Chairperson, Deloitte India), this discussion explored the growing regulatory scrutiny of auditors, and discussed maintaining their independence and effectiveness. While regulation enhances accountability, care must be taken to avoid excessive prescriptions that might negatively impact audit quality.
Auditing requires oversight due to recent failures and regulatory scrutiny. Self-regulation often falls short, on account of conflict of interests, thus undermining audit quality. Regulatory oversight is crucial for accountability, but Regulators should also play a developmental role, understanding real-world changes and challenges. Successful audits depend on cooperation from all stakeholders, especially management, to ensure the existence of effective controls.
Is Compliance Good Business?
The second day began with a plenary session featuring Mr. M. Damodaran, Mr. Ananth Narayan G. (Whole Time Member, SEBI) and Mr. Ashishkumar Chauhan (MD & CEO, NSE). This plenary session emphasized that compliance is not just about following rules, but embedding integrity and governance into a company’s core. The African proverb, “If you want to walk fast, walk alone; if you want to go far, walk together,” suitably captures the essence of compliance fostering trust, resilience, and long-term value creation.
Compensation – How Much is Too Much?
The session led by Mr. Ajay Bahl (Co-founder & Managing Partner, AZB & Partners), Mr. Sanjeev Aga (Former MD, Aditya Birla Nuvo; Former MD, Idea Cellular) and Mr. Sunil Mehta (Chairperson, IndusInd Bank; CMD, SPM Capital Advisers) examined the balance between fair remuneration and shareholder expectations.
Balancing shareholders’ concerns about excessive compensation with the need for adequate incentives requires a thoughtful approach. Compensation should reflect the market, the company’s size and risk level, and the individual’s responsibility and contribution. The worth of compensation should be tied to the risk, responsibility, and time spent on the role, ensuring it is a fair reward for the value and risks taken on, especially in high-responsibility roles like the Audit Committee for example.
Chairpersons – Biting More Than They Should Chew?
The session featured Mr. Homi R Khusrokhan (Former MD, Tata Chemicals & Tata Tea), Mr. Nawshir Mirza (Former Senior Partner, S. R. Batliboi & Co.) and Mr. M. Damodaran. It discussed whether the hyperactive involvement of some Chairpersons in Boards is affecting the management’s ability to operate efficiently. This raises important questions: Are non-executive Chairpersons overstepping into areas meant for management? How can we define and maintain clear boundaries?
The role of a Chairperson is to facilitate balanced decision-making, not to intrude on management’s operational domain. A good Chairperson fosters collaboration, values diverse perspectives, and ensures all voices are heard, speaking last in order to encourage open dialogue. As the boardroom has shifted focus from shareholder value to stakeholder value, Chairpersons must act as “first among equals,” balancing efficiency with inclusivity, and maintaining clear boundaries between governance and management.
Conclusion
Gatekeepers of Governance 2024 concluded with a call for ongoing improvement in corporate governance practices, to avoid failures and encourage long-term growth. By bringing together different stakeholders, the Summit highlighted ways to improve governance practices, stressing the importance of working together and being flexible to build a stronger and more resilient corporate ecosystem.
You can view the sessions through the following link:
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Muskan Saxena