Comply or explain’ approach in corporate governance regulations is most appropriate
Regulators prefer principle-based regulations when ‘one-size does not fit all’. For example, across the globe, regulators prefer principle-based accounting regulations (Generally Accepted Accounting Principles). The Securities and Exchange Board of India (Sebi) has adopted rule-based regulations, while the contexts of different companies are different. Most rules are aligned with best practices evolved in the US and other advanced economies, while Indian contexts are different. Therefore, they may not benefit companies.