Morparia flays criminalising clauses in business laws

Veteran banker Kalpana Morparia, who heads Wall Street bank JP Morgan's operations in South Asia, on Friday lashed out at "criminalising clauses in business laws". The legal system should not work on the presumption of all are guilty unless proven otherwise, Morparia told an event organised by industry lobby CII in the financial capital.

The comments come at a time when there have been concerns expressed by the business community about a slew of changes in the legal system. Morparia specifically mentioned the clause in the amended Companies Act that allows three months jail term to senior management if a company fails to meet corporate social responsibility obligations, which had triggered a debate a few months ago forcing government to pull back certain provisions.

"Criminalisation of business laws needs to be done away with, especially for provisions like CSR which were never mandatory," she was quoted as saying in an official statement. Criminal claws in business laws has become a "worrisome factor" for independent directors, she said.

"...while economies and businesses evolve, there may be transgressions, but it is vital to fix the responsibility. The presumption that all are guilty unless proved otherwise is not how jurisprudence should work," she said.

At a time when there are reports about lack of compliance on women directors, Morparia said diversity in the boardroom should be seen widely and should include measures to ensure there are right set of skills. She also "opined against" regulations like caps on tenure and age for independent directors, the statement said, adding she is also not comfortable with the demand for independent directors clearing qualifying test.

The CII statement quoted her as saying it is also "vital" for independent directors to do a due diligence before opting to join a board. "There is a constant need for independent directors to challenge the board for information that directors need rather than the information that is shared by the management by way of the colloquial 'show and tell'," she said.

Board evaluation has to move beyond the tick-box approach, into an exercise conducted by an external agency every three years, she suggested..