Family Run Enterprises Heave Sigh Of Relief After SEBI Climbdown On Splitting CMD Post

This news comes as a much needed relief for many family-run enterprises.  In a sudden about-turn, SEBI decided to make splitting of the posts of chairperson and managing director (CMD) by listed entities voluntary and not mandatory. A dozen such enterprises thrive in the Dravidian land. With one too many family members within such enterprises, splitting the CMD could have triggered considerable tensions within such enterprises. The consequences for them would have been a lot severe if it was enforced with a stricter fiat from the market regulator? What made the regulator do a U-Turn? One can debate the volte-face endlessly. One thing is sure, however. Regulation by force has often proved ineffective, and hasn’t really delivered the intended result. We have seen this happening in the unfolding Chitra imbroglio in the NSE. The entire governance structure at NSE appears to have gone for a toss. Will more rules solve the problems? They won’t. Be it in the re-nomination of the Maran couple on the board of Sun TV Network or the infamous Tata-Mistry imbroglio, corporate governance has been a consistent casualty. It reflects the erosion in the value system of society. The Venu Srinivasan and R Dinesh-led wings in the now partitioned TVS group have gone for non-family members to chair some of their boards. That’s refreshing. Laws often don’t get the right result.