CG to boost shareholder value8217;

CALCUTTA, SEPT 4: The chairman and CEO of Infosys Technologies Ltd, Narayana Murthy, today said that only companies practicing good corpo...

CALCUTTA, SEPT 4: The chairman and CEO of Infosys Technologies Ltd, Narayana Murthy, today said that only companies practicing good corporate governance CG would be able to maximise shareholders8217; wealth. However this needs to be done in a quot;legal and ethicalquot; manner, Murthy, who is also the chairman of CII national committee on corporate governance, said at a seminar here.

The Infosys CEO is widely credited for practicing good CG in the company, which was the only Indian firm to be listed on Nasdaq. Besides, Infosys was also the first in India to make financial disclosures as per US GAAP, considered to be the toughest accounting standards in the world. He said that a corporation8217;s ability to maximise shareholders8217; wealth reflected that the trust reposed by equity financiers on the company8217;s board was well reciprocated. According to him, the board of directors of companies should represent shareholders8217; interests irrespective of whether the firm was a family-owned listed corporation, a multinational, or apublic sector unit.

For under performing managements, Murthy8217;s word of advice was that they should step down and must not prevent transfer of shares to alternate managements. The seminar, organised by eastern region of CII, was addressed by Omkar Goswami, renowned economist and senior consultant, CII, Chris-Bark Jones, CEO of Indal, and Firdose Vandrevala, a director on the Tata Steel board.

The Infosys CEO also complained that the feudal mind set of Indian employers and high degree of government restrictions was obstructing the practice of good CG in companies which were willing. Murthy said that under such circumstances, it would be difficult for corporates to practice CG and thereby enhance shareholder value. Corporates did have a certain degree of social responsibility and they should be transparent and fair to the society, he said. In this context, he complimented the Tatas for being the most humanist employers in the country.

On financial disclosures, Murthy said that annual reports should containsegment-wise reporting and consolidation of accounts of group companies.

Omkar Goswami, in his presentation, said that the term quot;your companyquot; used by chairmen should not be used as a euphemism for quot;my companyquot;. According to him, ethics was necessary for practicing good CG. However, he said that most of the managements do not have disclosures relating to forex and derivatives risks as well as lack of sufficient details in annual reports regarding use of public funds. Goswami also said it was unfortunate that auditors in the country were being credited for giving least details about contingent liabilities.