20 January 2010
Governance in companies - the dark side - report
Here is attached the Asian Corporate Governance Association White Paper on Corporate Governance in India referred to in my previous post. I had sent them some comments on related party transactions and preferential allotments of warrants. I fully agree with the recommendations on related party transactions, but mainly disagree with the point on preferential allotment of warrants. I do not find anything inherently unfair in issue of warrants which are a form of options on the shares of the company - and a person gets the upside if the company does well and loses the upfront premium if not.
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I fully agree with comments of Shri Sandeep . The report is excellent regarding related- parties transactions . Warrants are options to exchange them with equity inaccordance with pricing formula specified by SEBI . If holders do not convert the loose 25% of price paid upfront . If allotment is fraudulent or manipulative SEBI has power to take deterrent actions.
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