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‘Full financial disclosures will strengthen companies’ credibility’

— Photo: K. Gopinathan

Discussing reforms: (From left) Arun Maira, Jitesh Khosla and K.N. Shenoy at a national conclave on corporate governance in India, in Bangalore on Wednesday.

Bangalore: Joint Secretary for Corporate Affairs, Government of India, Jitesh Khosla said here on Wednesday that the Centre’s MCA-21 e-governance initiative, enabling companies file documents online, has made it easier for the firms and investors to obtain details about a publicly held corporation.

Speaking at the National Conclave on Corporate Governance, organised by Confederation of Indian Industry and National Foundation for Corporate Governance, with the focus on disclosure practices, he said: “The Ministry of Corporate Affairs’ website receives an average of one million hits a day, which means all corporates are living in glass houses. Full financial disclosures will only strengthen their credibility.”

In addition to the major changes in Indian Companies Act, expected to be enacted by Parliament in its winter session, there could subsequently be other changes in the laws to make a uniform computer language format mandatory for financial disclosures, indicating cash-flow in profit and loss statements on a more frequent basis and more powers for audit committees within corporates, Mr. Khosla said.

Introducing the theme, Arun Maira, Chairman, The Boston Consulting Group, said businesses were part of a larger eco-system where a “porous barrier” was needed between those governing a company and its stakeholders.

“The World Economic Forum in a report revealed that most citizens in the West distrusted large business corporates and this calls for introspection,” he said.

In his key-note address, K.N. Shenoy, past president of CII and chairman of Sobis Software, said: “Close to 100 Indian MNCs are expected to be operating globally within a few years. Indian businesses are rapidly acquiring companies overseas and trying to compete globally. This will make it necessary for Indian corporates to not only comply with laws within the country but also in other jurisdictions where they plan to operate or they could fail.”

The image of a company in the eyes of all its stakeholders and consumers had undergone rapid changes in two decades, Mr. Shenoy said.

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