There’re hundreds of Satyams listed on the stock exchanges. Good coporate governance seems to be last in the priority list as over 1,200 companies listed on the Bombay Stock Exchange have yet again failed to comply with corporate governance norms for the quarter ended September 2008.

“In terms of Clause 49 of the Listing Agreement, 1,228 companies have not submitted corporate governance report,” the BSE says. The exchange has been putting out almost the same number of companies in the list of those of violating Clause 49, quarter after quarter. The Indian Express had earlier reported about this menace but the exchanges and the regulator are yet to tackle the issue.

Experts said this is a serious issue as Clause 49 covers all major functions of a company and its board, including composition of the board, audit committee, CEO/CFO certification of accounts, basis of related party transactions, disclosure of accounting treatment and details about subsidiary companies. Listed companies — there are 4,995 companies listed on the BSE — are expected to follow the corporate governance structure as laid out by Clause 49 in the listing rules.

“Most of these companies are small- or medium-sized companies. Promoters of some of these companies do overstate/ understate profits and fudge their accounts. But the magnitude of fudging is on a much smaller scale when compared to Satyam. But, when so many companies fail in corporate governance, it could become a problem for others including shareholders and lenders,” said DR Dogra, executive director, Care Ratings.

... contd.