The National Stock Exchange (NSE) on Tuesday launched a new corporate governance initiative -- NSE Prime, which the companies listed on the exchange can adopt voluntarily.
NSE Prime is a framework that prescribes higher standards of corporate governance for listed companies than those required by regulations. Additional disclosure requirements have also been prescribed to provide for higher quality of public information and greater transparency.
Listed companies that voluntarily choose to be a part of NSE Prime will need to comply with pre-defined norms on an ongoing basis, which will be monitored by the NSE.
This initiative will raise the bar for corporate governance standards in India, enable investors to identify companies which have voluntarily signed up for higher standards of corporate governance, broaden the quality of investors in listed companies and further strengthen trust in the Indian capital markets.
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"Improved corporate governance standards, greater transparency and better disclosures will help companies build stronger and sustainable businesses that can stand the test of time. This will not only help companies and investors but also accelerate market development at large," said Vikram Limaye, MD and CEO of NSE.
Commenting on the initiative, billionaire banker Uday Kotak, MD and CEO of Kotak Mahindra Bank, said, "Corporate governance is the key to investor trust in corporations. Corporates need to be able to build their strategic guardrails along with transparency on how they operate. NSE's initiative is another step in the direction of raising the standards of corporate governance."
He further added that proper governance actually supports entrepreneurship and professionalism for sustainable growth. "We need to ensure the best of governance standard to put in place. It gives confidence to investors," Kotak said.
Former Infosys CFO TV Mohandas Pai said, "Good corporate governance needs business entities to follow standards which are set at a higher level than regulations do. It is one of the best investments that businesses can make, as it lowers the cost of capital and makes business more competitive. Recognising such entities which set higher standards for themselves enables the overall improvement in the business environment."
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