Dear Professional Colleagues,
“Only knowledge can help us to know the universe, which is vast like an Ocean. It enlightens everyone’s mind.”– Rig Veda
We are witnessing a series of changes in procedural and regulatory regime governing the business environment. Friends, when there is change, what becomes more important is not only to understand and appreciate the language of change, but also to prepare to capitalize on opportunities opened by such changes. As these changes have in store lot of opportunities for Company Secretaries, the Institute has taken up a number of Capacity Building Initiatives for its members which are enumerated in the following paragraphs.
XBRL A New Financial Reporting Language
Businesses are adapting to an operating environment which increasingly focuses on improved corporate governance and better risk management. In response to changing expectations of stakeholders towards transparency and good governance, a technology led new information management environment is continuously emerging. New standards of financial reporting like Extensible Business Reporting Language (XBRL) a language for the electronic communication of business and financial data is revolutionizing business reporting around the world.
XBRL can be applied to a wide range of business, financial and statistical data which needs to be filed with regulatory authorities, stored, exchanged and analysed. XBRL provides a more cost effective and reliable platform for information transfer, in which data is instantly accessible and re-usable across the corporate reporting supply chain ” between businesses and regulators, among regulators and between regulators and stakeholders, the markets and industry.
As XBRL is being positioned as the vocabulary of business and financial reporting, this will open new opportunities for Company Secretaries. Here, I wish to emphasise that this can only be achieved by acquiring sufficient expertise in this technology driven new reporting environment.
National Webcast on XBRL
The Institute has geared up itself to create awareness amongst its members by organising capacity building programmes and also to train them on various technical aspects of XBRL. The Institute is regularly updating its members on all developments/steps initiated by the Ministry of Corporate Affairs towards procedural simplification and XBRL, by sending bulk mails, through CS Update and by hosting on the website of the Institute.
The Institute has drawn up an action plan under which chain programmes on XBRL are being organized through out the country. In this sequence, you are aware that the Institute organized a National Seminar on XBRL which was webcast live throughout the country to have wider participation and awareness among the members. The seminar was inaugurated by Shri D K Mittal, Secretary, Ministry of Corporate Affairs. I appreciate the efforts made by Regional Councils and Chapters in making the webcast a grand success.
Guidance note on Non-financial disclosures
Today, Non financial disclosures are being seen as a way to communicate the corporate activities that impact our society and the environment. One of the principal underpinnings of good corporate governance is to ensure that all stakeholders are provided with disclosures not only on financial and operating results but also non financial aspects of business to enable them to understand and appreciate the business purpose and objectives.
I am pleased to inform you that the Guidance Note on Non-financial Disclosures formulated by the Secretarial Standards Board was released by Shri D K Mittal, Secretary, Ministry of Corporate Affairs at the National Seminar on XBRL on May 21, 2011 in the presence of Dr. Aditi Haldar, Director, GRI focal point India. The Guidance Note provides guidance on mandatory as well as voluntary disclosures, including a list of suggested items which can also be covered under Non-financial disclosures.
Collaboration with Global Reporting Initiative (GRI)
Global Reporting Initiative (GRI) is a network based organization pioneering the world™s most widely accepted Sustainability Reporting Framework. The Institute has initiated discussions with GRI in propagating sustainability initiatives and reporting amongst corporate India. I am pleased to inform you that the Institute is working on modalities for a long term partnership with GRI to conduct capacity building programmes for its members throughout the country on sustainability issues and sustainability reporting. In this direction, the ICSI has already organised chain programmes in collaboration with GRI.
Foreign Contribution Regulation Act (FCRA), 2010
As you are aware, the Government has notified Foreign Contribution Regulation Act (FCRA), 2010 w.e.f. 1.5.2011. The new Act has done away with the concept of permanent registration and introduced the concept of a five year registration so that dormant organizations do not continue. All existing registered organizations would now be deemed to be on a five year validity; organizations of political nature would not be allowed to receive foreign funds. Further, the ceiling on administrative expenses and procedure for suspension and cancellation of registration has been prescribed under the new Act. The Act also provides for compounding of offences in respect of bona fide mistakes of NGOs. FCRA is one of the areas wherein a number of our members are rendering their valuable services. I urge upon the members to visit the website of Ministry of Home Affairs (mha.nic.in) for further details.
FDI in Limited Liability Partnerships
The Government policy on Foreign Direct Investment now freely allows FDI in all sectors, except a few sectors where the existing and notified sectoral policy does not permit FDI beyond a ceiling. Today about 95% of SMEs operate as proprietary and partnership concerns. Until recently they were not permitted for FDI, putting them in a disadvantageous position in both domestic as well as international markets. Now, with allowing FDI in LLPs, I am sure, it would lead to conversion of SMEs into LLPs and provide them competitive advantage.
Combinations under Competition Act
Corporate India™s appetite for inorganic growth has resulted in making the year 2011, one of the best years of M&A activity, through M&A deals valuing $68.3 billion a three fold increase over 2009. With the number of domestic and cross border mergers and acquisitions expected to rise over the next few years, the corporates would be looking for competent professionals like Company Secretaries for successful completion of pre and post M&A deals.
Recently, the Government has notified sections 5 and 6 of Competition Act, 2002 dealing with regulation of combinations consisting of mergers, amalgamations and acquisitions. The Company Secretaries with expert knowledge of various facets of competition law, are most competent professionals to guide and advice businesses on competition matters.
Investor Education and Awareness
Investor education and awareness is one of the core activities of the Institute towards promoting good corporate governance. In this direction, the Institute has been actively supporting the initiatives taken by Ministry of Corporate Affairs, SEBI and Stock Exchanges by organizing investor awareness programmes.
Since 2005, the Institute has organised about 500 Investor Awareness Programmes throughout the country through its Regional Offices and Chapters.
With a view to convert the investor education and awareness into a mass movement, the Ministry of Corporate Affairs has decided to upscale this initiative by associating a number of organizations as partners in this area. The Institute as partner organisation in this initiative of Ministry of Corporate Affairs has been allocated 92 districts of the country to organise investor awareness programmes during financial year 2011-12. The Institute has drawn up a detailed action plan to organize investor awareness programmes every quarter in each town of Districts allocated to the Institute. I invite all of you to extend your support and cooperation in making this initiative a grand success.
The Global M&A Strategy Conclave 2011
As part of its capacity building initiatives, the Institute has associated itself as Supporting Partner in organisation of Global M&A Strategy Conclave, 2011 held on May 26-27, 2011 at Mumbai. The Conclave discussed the current issues affecting the variant industries in India dealing with Mergers and Acquisition, design a successful cross border strategy, mitigate risk for M&A deal, examine local and global markets, and help achieve a smooth completion of M&A deals and company integration.
Visit to Hyderabad
Recently, I visited Hyderabad and participated in a seminar organised by Hyderabad Chapter on Corporate Governance Challenges & Opportunities. Shri R Ramachandran, Chairman and Managing Director, Andhra Bank was the Chief Guest and inaugurated the Seminar. I had a meeting with Mr. Ramachandran and during the course of our interaction, we suggested to obtain the services of Company Secretaries. We also urged upon him to ensure that the banks regularly obtain Due Diligence from the Professionals especially Practicing Company Secretaries. Mr. Ramachandran appreciated the quality of Company Secretaries and assured us of involving more and more Company Secretaries in Diligence reporting for banks.
During the visit, I took the opportunity to interact with press, the members and the students of the Institute. I informed them about the initiatives taken by the Institute towards capacity building of members and students including those for providing efficient services to them. I assured the members and students of taking appropriate measures on the issues raised by them.
Meeting with Chairman– IRDA
A delegation of the Institute comprising myself, S/Shri C Sudhir Babu, Council Member, S S Marthi, Vice Chairman, SIRC, N. K. Jain, Secretary & CEO, P. Chiranjeevulu, Chairman of the Hyderabad Chapter of the ICSI, met Sri J Harinarayana, Chairman and Shri Giridhar, IAS, Managing Director of IRDA on 19th April, 2011 at their office. During the meeting, we discussed matters relating to role of Company Secretaries in the present corporate world and the need for internal audit of corporate agents in insurance sector by Company Secretaries in Practice. The Chairman and the Managing Director, IRDA agreed to examine the matter and the possibility of introducing the internal audit of corporate agents.
Collaborative Programme on Capital Market
I am pleased to inform you that the Institute associated itself as ˜Academic Partner™ in the 6th Annual Summit of ASSOCHAM on Capital Markets on May 26, 2011 at New Delhi. The Summit was well designed to impart new directions and policies that the government has set in place, based on the Capital Markets Master plan, in view of the imperative issues and developments in the Capital Markets in India. There was no participation fee for the ICSI members. I am sure the members would have benefited by deliberations at the Summit.
12th Practising Company Secretaries Conference
12th National Conference of Practising Company Secretaries is being held on July 14-15-16, 2011 at Ooty on the theme PCS: Strategic Options in the New Decade. I invite all of you to attend and participate in large numbers.
Friends, having explained the texture of changes and recent initiatives of the Institute, I would like to urge upon all of you that, like change, the learning is a constant process and necessary for the evolution, development and sustainability as a Professional.
I invite all of you to support the initiatives of the Institute and be part in our journey towards Professional Excellence.
“Intelligence is the mightiest and nothing is beyond its reach”– Rig Veda
With kind regards,
May 31, 2011
(CS ANIL MURARKA)