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Rediff.com  » Business » 4 firms fail corporate governance test in US

4 firms fail corporate governance test in US

By BS Economy Bureau in New Delhi
May 23, 2003 12:13 IST
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Four Indian companies listed on US bourses have flouted laws under the Sarbanes-Oxley Act.

Government officials, however, said their variance with the US law was marginal. The names of the fimrs were not disclosed.

An official said India had taken up the issue with the US government, but the latter said it could not obtain a Congressional waiver for the firms.

He added that the defaults were similar to those of some European companies listed in the US, and hoped that if the issue was resolved across the Atlantic, the Indian companies would also be let off the hook.

Germany recently sought waiver of Sarbanes-Oxley Act stipulations for several companies listed on US exchanges. The matter has not yet been resolved.

The Sarbanes-Oxley Act was put in place after the accounting scandal of Enron in 2001 and those involving WorldCom, Qwest and Arthur Andersen.

It brought about changes in corporate governance practices, auditor independence, enhanced financial disclosures and higher penalties for wilful defaults by mangers and auditors.

Indian companies listed in the US are mainly concerned with disclosure norms because several of them are not required back home.

In India, companies are often exempted from disclosure norms and from submitting balance sheets of subsidiaries in their annual reports.

In the last few years, several Indian companies--including Infosys Technologies, Satyam Computer, Wipro, rediff.com and Dr Reddy's Labs -- have listed on US exchanges.
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BS Economy Bureau in New Delhi
 

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