Following the Gensol Engineering revelation on financial mismanagement, Sebi chief Tuhin Kanta Pandey Thursday spoke on corporate governance, saying it is essential to protect shareholder interests, particularly those of minority shareholders.
Speaking at a CII conference, Pandey said for listed companies, robust governance mechanisms are essential for enhancing investor confidence through transparent disclosures, board independence, and effective oversight.
Currently the Indian market ecosystem has over 13 crore investors investing over 5,400 listed companies as compared to 4.9 crore five year ago. Similarly, the listing obligations and disclosure requirements of mutual fund investors have now grown to 5.4 crore.
Given this growing investor base, Pandey said Sebi will continue to expect a higher bar on governance, but the true and lasting change must come from within corporate boardrooms.
Pandey's remarks came in the wake of a Sebi interim order in the case of Gensol Engineering, which allegedly diverted funds meant for the company for personal use. Following the order, promoters Anmol Singh Jaggi and Puneet Singh Jaggi, have resigned from their directorial roles.
Sebi said Gensol had raised Rs 975 crore in loans from institutions like IREDA and PFC for buying electric vehicles. However, only a part of the money was actually used for that purpose.
The probe by the regulator showed that more than Rs 200 crore was routed through a car dealer and cycled back to promoter-linked entities. Some of it was used for unrelated personal expenses, including buying luxury real estate.
Gensol said it will fully cooperate with the forensic audit to be conducted at the behest of Sebi. The regulator will appoint a forensic auditor to thoroughly examine the books of accounts of the company and its related entities.
Pandey said governance failures in large corporations can have ripple effects across the market and economy. "Preventing such failures is essential to maintaining financial stability."
By mandating disclosures, board structures, and oversight mechanisms, Sebi aims to create a self-regulating environment that encourages ethical and responsible corporate behaviour.
Speaking at a CII conference, Pandey said for listed companies, robust governance mechanisms are essential for enhancing investor confidence through transparent disclosures, board independence, and effective oversight.
Currently the Indian market ecosystem has over 13 crore investors investing over 5,400 listed companies as compared to 4.9 crore five year ago. Similarly, the listing obligations and disclosure requirements of mutual fund investors have now grown to 5.4 crore.
Given this growing investor base, Pandey said Sebi will continue to expect a higher bar on governance, but the true and lasting change must come from within corporate boardrooms.
Pandey's remarks came in the wake of a Sebi interim order in the case of Gensol Engineering, which allegedly diverted funds meant for the company for personal use. Following the order, promoters Anmol Singh Jaggi and Puneet Singh Jaggi, have resigned from their directorial roles.
Sebi said Gensol had raised Rs 975 crore in loans from institutions like IREDA and PFC for buying electric vehicles. However, only a part of the money was actually used for that purpose.
The probe by the regulator showed that more than Rs 200 crore was routed through a car dealer and cycled back to promoter-linked entities. Some of it was used for unrelated personal expenses, including buying luxury real estate.
Gensol said it will fully cooperate with the forensic audit to be conducted at the behest of Sebi. The regulator will appoint a forensic auditor to thoroughly examine the books of accounts of the company and its related entities.
Pandey said governance failures in large corporations can have ripple effects across the market and economy. "Preventing such failures is essential to maintaining financial stability."
By mandating disclosures, board structures, and oversight mechanisms, Sebi aims to create a self-regulating environment that encourages ethical and responsible corporate behaviour.
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