MUMBAI, July 29: The senior executive director of Securities and Exchange Board of India (SEBI) Pratip Kar has stated that the SEBI was considering changing the guidelines for bringing in more outside directors into the board of trustees of mutual funds.

Kar said following SEBI's regular discussions with the Association of Mutual Funds of India (AMFI), it has been decided that a majority of outside directors should form the board of trustees.

``Such a move would result in greater corporate governance and optimise shareholder values,'' Kar said while addressing a seminar on corporate governance here on Tuesday.

In another major initiative to bring changes in the audit and annual disclosures of accounts of mutual funds, SEBI was holding discussions with the Institute of Chartered Accountants of India (ICAI), Kar said.On regulating the market intermediaries, Kar said emphatically, ``any amount of regulation can never prevent a financial crime.''

The SEBI official was in favour of a postal ballot system to take an opinion at the annual general meeting of a company. Refusing to agree to the common argument of corporates that a postal ballot could be misused or misplaced due to postal bottlenecks, Kar said ``when a corporate can send dividend warrants and other certificates to shareholders through posts, why can't postal ballot be made effective.''

Postal ballot would bring in more flexibility into the system and SEBI has made a beginning by permitting canbank mutual fund to go for postal ballot at its AGM.

Kar said corporate disclosures also implied greater disclosures through the balance sheets and prospectuses.

Bombay Stock Exchange (BSE) president, M G Damani said good corporate governance meant that the companies should be very responsive to the demands of the shareholders. He suggested that companies should hold their annual general meetings in the cities in which those companies were listed. ``A company listed on the Rajkot Stock Exchange should hold its agm in Rajkot,'' he said.

CMD of Bajaj Auto said, ``in the present situation, there is no funding of takeovers by banks and financial institutions in India."

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.