New Delhi, April 28 (IANS): The Indian capital market regulator on Friday voiced serious concern over the standard of corporate governance, saying the country lacked a code of conduct for institutional investors.

"Is the system of corporate governance in the country working satisfactorily...Majority would say no," Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said, while addressing the annual session here of industry chamber, the Confederation of Indian Industry (CII).

Noting that according to company ownership patterns in the Indian context, "Fifty per cent ownership is with the promoters, while institutional investment is increasing, nowadays touching 30 per cent", Tyagi said there is "no code of conduct" for institutional investors.

"What are their responsibilities, once they are significant shareholders? Our impression, and this is the saddest part, is that promoters prefer institutional investors who are passive," he said.

"There is need for a common stewardship code. Just increasing the institutional share, without taking active interest and responsibility, does not serve corporate governance," he added.

Pointing out that investors' rights are a SEBI subject, the Chairman said: "If promoters' plus institutional shareholding crosses 80 per cent, then retail, minority investors really become a minority...who will take care of their interests?"

"Then there is the issue of independent directors, who have not been discharging their functions properly. They have no commitment to any cause, resign without giving any reasons, just say they are sick...giving fake reasons."

"These are issues of serious concern, to which I have no solutions at the moment," Tyagi added.

He also said the functioning of independent auditors in India was another matter of concern.

"If the auditors' committee is not working, independent directors are not independent and there is no code of conduct for institutional investors, then the system is clearly not working," Tyagi added.