Question: Is corporate governance being strengthened in the Indian corporate sector? I am told that promoters are still having a free hand.
Answer: Shareholder activism is now gaining strength in India which is putting pressure on promoters and the management. Empowered investors, including foreign private equity funds, are voicing concerns on several issues ranging from appointment of key managerial personnel, their compensation and related party transactions. Many well known companies are facing difficulties from aggressive shareholders when it comes to appointment of independent directors, the quantum of their remuneration and grant of employee stock option plans. At shareholders’ meetings tough questions are being asked and even the smallest shareholder can exercise his vote as a result of electronic voting which is now mandatory. The Securities & Exchange Board of India has mandated institutional investors to implement the Stewardship Code. Under this Code, a clear policy has to be set up in respect of voting by certain authorities which have invested public funds. These authorities act collectively and collaborate with each other making the voting power of institutional investors very effective for ensuring good corporate governance and protecting shareholders’ interests.
I have purchased a couple of properties in Delhi and Pune. I find it difficult to manage them being based in the Gulf. I have been told that I can give a power of attorney to persons who have my confidence. Can you throw some light on what I should do?
There are two types of documents which you may execute for the sole purpose of property management. The first type is one where you give the constituted attorney a power to sign any documents, including a leave and licence agreement, when you decide to let out a property for a specified period of time, generally eleven months renewable for three terms. Under this power, he would have the authority to pay stamp duty, registration fees, legal charges, brokerage, etc. The second type of power of attorney is one where several restrictions are placed on the attorney holder. This power is given to a constituted attorney for a limited period of time. It is necessary that the instrument is carefully drafted by an experienced lawyer with adequate safeguards whereby you would have the right to revoke the power of attorney in specified set of circumstances which are mentioned in the document. An unconditional power of attorney should never be given in favour of any person even if he is closely related to you.
My son who is in an engineering college in India wants to specialise in Blockchain technology. Is there any scope in this area of specialisation?
With more and more persons holding crypto currencies, exchanges are coming up which enable trade in this virtual currency. These exchanges require software and engineering talent. There are at present more than 10,000 active job vacancies in the crypto currency segment. Even global exchanges are recruiting engineers from India. There is a great demand for a blockchain engineer who has an understanding of blockchain security, platforms, architecture and standards. Crypto exchanges need expert talent to build, maintain and improve multiple components. They need user-interface designers and front-end engineers to build a visually appealing application which is simple and seamless to use. The exchanges also need engineers to build a trading platform which can quickly match buyers and sellers which would enable immediate transactions to take effect.
H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.
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