The committee, set up by the Securities and Exchange Board of India (SEBI), in its first meeting here today also decided to set up three sub-groups to focus on each of the constituents of corporate governance, shareholders, board of directors and the management.

The group sought to first identify and define the rights, roles, responsibilities and accountability of these constituents before determining the lacunae in present regulations and developing instrumentalities to achieve desired levels of governance.

It agreed that the objective of corporate governance would be the "enhancement of long-term shareholder value while at the same time protecting the interests of other stakeholders".

In a statement, SEBI chairman D R Mehta said "it is imperative for companies tomaximise shareholder value and wealth". While some companies had voluntarily established a code of governance, there were many others who were not paying adequate attention to the needs of shareholders, he said.

Besides, investors have also suffered on account of unscrupulous companies which have raised capital from the market at high premium and at the hands of promoters who allotted themselves preference shares at high premium, Mehta said stressing on the need for corporate governance in India.

The Birla committee, set up with a mandate to suggest changes in the listing agreement to promote corporate governance, would also draw up a code of corporate best practices, the statement said.

The group discussed various international codes and reports on governance, such as the Cadbury committee, Greenbury committee, the Hampel committee, the combined code of corporate governance in the UK, the OECD draft code, the US Blue-Ribbon committee code and the CII code of desirable corporate governance.

The panelalso decided to take the benefit of institutions and chambers of industry who have done considerable work in the area of corporate governance.

Meanwhile, to promote corporate governance, SEBI has taken steps like strengthening disclosure norms for initial public offers, mandating cash flow, fund flow and the utilisation and end use of funds statements.