NEW DELHI, April 2: The Confederation of Indian Industry has asked the government to allow greater funding to the corporate sector against security of shares and debentures. The chamber has said that when this is in place, the take-over code should be modified to reflect international norms. Once takeover finance is easily available to Indian entrepreneurs, the trigger should increase to 20 per cent and the minimum bid should reflect at least a 51 per cent take-over, CII added.In its final code for corporate governance which will be released formally soon, it has been recommended that it would be desirable for FIs as pure creditors to re-write their covenants to eliminate having nominee directors except in the event of serious and systematic debt default and in case of the debtor company not providing six-monthly or quarterly operational data to the concerned FIs. On the subject of credit rating the chamber has said that if any company goes to more than one credit rating agency, then it must divulge in theprospectus and issue document the rating of all the agencies. CII is of the view that the firms making foreign debt issues cannot have two sets of disclosure norms.On the defaulting companies, CII stated that companies that default on fixed deposits should not be permitted to accept further deposits and make inter-corporate loans or investments until the default is made good, and, declare dividends until the default is made good.On FIs and nominee directors, CII has recommended that the number of companies where there are nominee directors should be reduced. CII code says that the FIs have argued that there are too many companies where they are on the board and too few competent officers to do the task properly. CII feels that the FIs should take decision to withdraw from the boards of companies where their individual share-holding is five per cent or less.
