New governance rules challenge Indian listcos

Author: Ashley Lee | Published: 22 May 2014
The regulator’s listing agreement amends go further than the Companies Act

Stricter related party rules and director requirements under Sebi’s revised listing agreement will create new challenges for the country’s public companies.

The changes are intended to bring the listing requirements in line with India’s new Companies Act, but it is clear that prioritising corporate governance could come at a cost.

Protecting minority shareholders is a theme throughout the Securities and Exchange Board of India's (Sebi) amendments to clause 49 of the agreement, which listed companies must comply with by October 1.

Arun Balasubramanian, co-head of Freshfields Bruckhaus Deringer’s India group, said that one of the overarching principles behind the Companies Act seems to be to balance out significant promoter influence, while adding checks, balances...