Discussion on good corporate governance

Corporate governance is an area of great importance for all financial and real sector institutions, opined experts here today during a seminar on 'Good corporate governance means good business' organised jointly by Nepal Stock Exchange (Nepse) and International Finance Corporation (IFC), the private sector arm of the World Bank Group.
"For companies, good governance means securing access to broader based, cheaper capital," said Nepse general manager Shanker Man Singh, adding that for investors it means enhanced shareholder value. "Good governance equals good business. All of us are working towards that goal, whether through legislative measures, training or inculcating new standards of ethics in business," he said.
At a time when domestic companies are deep into boardroom disputes, corporate good governance is in a shambles. Regulatory authorities like Nepal Rastra Bank (NRB), Securities Board of Nepal (Sebon), Beema Samiti, Company Registrar and front line regulator Nepse face great challenges in safeguarding depositors' and shareholders' rights.
Though in April 2005 Corporate Governance Country Assessment -- a corporate financial governance project that provided the impetus for the development of Nepali capital market -- with the help of World Bank, the situation has not yet improved.
For the regulatory authorities supervision and monitoring are becoming more challenging due to lack of trained manpower, infrastructure and increasing number of public companies.
"The Company Act provides basic corporate framework, but when companies go public and their shares get publicly traded at the sole secondary market, their corporate good governance is a matter of concern for the public as well," Singh said.
"Capital market is limited to family, multinationals are not going public and public enterprises are suffering from political influence," said Constituent Assembly member and industrialist Padhma Jyoti. With a five-decade long experience and expertise in Nepali corporate business, he urged entrepreneurs to escape from political turmoil.
Mike Lubrano, MD of Catrca Capital, Washington presented a paper on, "Stock Exchange and Improvement in Corporate Governance: the Case of Novo Mercado, Brazil'. Sanaa Abzouzid of IFC presented a paper on 'Preparing a family business for IPO'. She explored the feasibility of transformation of family business into public business in Nepal.
A firm with good governance can attract higher investment premiums, have cheaper access to debt, outperform its peers in the long run and gain better access to multilateral investors. To establish good corporate governance, a firm should have well-defined shareholders rights including protection of minority shareholders, solid control environment including strong risk management and internal control, high levels of transparency and disclosure and an empowered and capable Board of Directors.
"Business is not just about making sound investment decisions, taking and managing risks and dealing with economic uncertainties. Today, it is about social responsibility, putting all of our actions under public scrutiny and responding to the concerns of those among whom we conduct our business in open and accountable way," Singh said adding that it is important for all to remember that good governance, like personal integrity, is no longer a luxury but a necessity.
Securities Board of Nepal chairman Dr Sur Bir Poudel, Nepal Bankers' Association president Sashin Joshi, Himalayan Distillery chairman Narendra Basnyat and Unilever Nepal managing director Kamran Baqr also shared their experiences of corporate good governance.
NRB deputy governor Krishna Bahadur Manandhar and Washington-based IFC corporate governance unit's Maxin Garvey also shed light on good corporate governance.