‘If we don’t check CEO pays,loss-making firms will be in trouble’

They are just talking. There is a broad agreement on things. Parliament has a very strong view,and you have yours. Parliament has left some leeway,but the basic concept is that we can’t depart from Parliamentary suggestions. Like rotation of independent directors,audit firms…what you can do is play with five-nine years,but you cant remove it. Nowadays,no big company has only one company,so if you have a very valuable director you can move him to other group company,who is stopping you? This is a report of Parliament,not something we are recommending…they (committee) have left a gap and we have to work within that frame.

Which are the tricky issues?

Typically they are talking about subsidiaries of subsidiaries,CSR,remuneration,rotation of auditors. They have been talking about these things.

But CSR of 2 pc has come as a surprise?

We did not recommend it. The Parliamentary Standing Committee on Finance recommended it. They are saying that if it is made mandatory,it will require policing. Now,if companies have not spent 2 per cent of their profits on CSR,then what are we going to do about it? Send inspectors? The main thing is that we can’t simply make it mandatory. Their (corporate sector’s) main reluctance is about policing. And rightly so.

What about rotation of auditors?

Well,they say it is not done any where else except in Italy. Now they have a point here that if it’s not done anywhere else,why here. Corporates say that in rotation they will go from one company to other. There are some practical issues involved. Companies have lot of subsidiaries and then they required to prepare consolidated accounts for which they require the same set of auditors and then they say how do you go about it. So there are issues,let us see.

What do you think about remuneration?

There is no problem. If we don’t do this,they (corporates) will get in trouble. In fact,it is good that we are the whipping horse because they will get in trouble if we don’t (keep a check on remuneration). If your company is making losses and you want to give high remuneration,what do you expect? All we do is that if you make losses we say we will keep your remuneration at last year’s level. I can’t got to Parliament saying this. Parliament was itself divided on remuneration for itself.