Indian cos on NYSE can breathe easy with tighter norms

Said NYSE’s senior managing director James E Shapiro: “Foreign private issuers listed on the NYSE will have an additional compliance burden. All non-US companies listed on the NYSE will have to abide with home-country practices with respect to a number of corporate governance matters such as the audit committee requirement and the NYSE shareholder approval and voting rights rules.”

Several Indian companies like Wipro, Satyam and ICICI Bank are listed on the NYSE. “Foreign private issuers should also make US investors aware of the significant ways in which their home country corporate governance practices differs from those followed by domestic companies under NYSE listing standards,” he said.

The NYSE committee has proposed a new set of recommendations with regard to corporate governance listing norms following the proposal made to it by the SEC. The new set of listing norms is basically to enhance the accountability, integrity and transparency of NYSE-listed companies.

Some of the important changes recommended by NYSE corporate accountability and listing standards were:

» Increasing the role and authority of independent directors;

» Tightening the definition of ‘independent’ director and adding new audit committee qualification requirements;

» Giving shareholders more opportunity to monitor and participate in the governance of their companies and establising new control and enforcement mechanisms

Each listed company’s CEO must certify annually that the company has established and complied with procedures for verifying accuracy and completness of information provided to investors and that he or she has no reasonable cause to believe that the information provided to investors is not accurate and complete. CEO must certify annually that they are not aware of any company violations of NYSE listing standards.

The Recommendations are: * Listed companies are required to have a majority of independent directors.

» Tighten NYSE’s definition of ‘independent director’ – no director qualifies as ‘independent’ unless the board of director affirmatively determines that the director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with company)

» Empower non-management directors to serve as a more effective check on management by way of meeting regularay scheduled executive sessions without management

» Listed firms are required to have nominating/corporate governance and compensation committee, composed entirely of independent directors.