3 cheers for corporate governance

3 cheers for corporate governance

Asish K Bhattacharyya /  November 28, 2011, 0:33 IST Business Standard

3 cheers for corporate governance: Exit of Mr Akula from SKS Micro finance Limited, the only listed micro finance company, provides some lessons in corporate governance. The first is that holding of majority voting rights by institutions does not necessarily improve corporate governance. The company’s shareholding pattern as at September 2011 was: Promoters: 37%, FII 19%, Indian Financial Institutions: 6%, Indian Bodies Corporate: 14%, Foreign Bodies Corporate: 12 % and others: 12%. Effective corporate governance requires institutions to play their role effectively. That has not happened in the case of SKS. Second is that the corporate governance system comes under stress when a company deviates from its stated vision and mission. The web site of the company articulates the mission as: