The government is set to empower ordinary shareholders of the eight lakh domestic companies by encouraging them to critically examine the decisions of the companies, and if they feel something amiss, complain to the government.
The ministry of corporate affairs will investigate if such complaints have merit. If the probe reveals wrong-doing, the ministry may even move the Company Law Board to rescue the company and book the erring executives the way it did in the case of scam-hit Satyam Computer Services, said a ministry official, who asked not to be named.
As a beginning, the ministry is launching an awareness blitzkrieg across financial and regional newspapers targeting the first gatekeeper in any company, the ordinary investor, impressing upon her the rights as well as the need to question the decisions of the companies at annual general meetings.
“The role of shareholders in the governance of a company is crucial and they should measure up to the task. The other gatekeepers include lenders, internal and external auditors, independent directors and regulators. The systematic fraud in Satyam has highlighted the imperfections in the system,” said the official, who asked not to be named.
While ordering inspection of the books of accounts of six public sector units recently, minister for corporate affairs Prem Chand Gupta had said, “Our idea is to clean the system. The corporate sector is expected to follow best practices as far as corporate governance is concerned.”