Chennai, December 28, 2008
The Hindu Business Line
The Satyam-Maytas deal issue has set back regulation of corporate governance as authorities are now looking at a ‘prescriptive’ route rather than self-regulation, according to R. Vasudevan, Director of Inspection and Investigation, Ministry of Corporate Affairs.
Referring to the $1.6-billion deal in which Satyam Computer Services had planned to acquire Maytas Properties and Maytas Infrastructure — controlled by the sons of Satyam Computer’s chairman, B. Ramalinga Raju — but was dropped due to a strong negative reaction from the markets and investors, he said the issue had been an “eye opener on the level of institutional performance”.
Vasudevan, addressing a seminar on corporate governance organised by the Institute of Chartered Accountants of India and the National Foundation for Corporate Governance, said at a time when the new Company Bill is to be presented before Parliament, the thinking had been to move away from a regulated regime to greater self regulation.
Regulators had been even considering that related body transactions should be left to self-regulation under corporate governance.
But the Satyam-Maytas issue has “turned us back”. It has “raised the need to rethink self regulation”.
The Ministry, which has called for the details of the deal that had been proposed, will hold an inquiry into it.
The Corporate Affairs Ministry is also thinking of regulating independent directors on the boards of companies, a turnaround from the plans to insulate the directors from regulation.
That the Satyam-Maytas deal was called off is thanks to “investor activism”, he said. The companies planned to be acquired may have been rich — but that is not the point.
It is about ethics and the deal should first have been presented to the shareholders and the general body rather than being pushed through a board meeting.
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