Nearly one-third of Nifty is ‘uninvestable’; there is a need for focus on corporate governance: Quantum Advisors

added that ICGN’s India engagement is part of a broader effort to deepen dialogue between global asset owners and Indian regulators, boards and companies. India’s scale, she noted, makes it impossible for large international portfolios to ignore . Quantum is the first signatory to ICGN’s global stewardship code in India.

Corporate governance needs to be in focus amidst India’s soaring equity markets, according to Quantum Advisors. At a media meet held by Quantum Advisors along with the International Corporate Governance Network (ICGN) CEO Jen Sission in Mumbai, Quantum founder Ajit Dayal said, “From our perspective, from our integrity score, maybe 30 percent of the index is uninvestable. It shows the gap between what the reporting standards are and what the practices are.”

Quantum CIO Chirag Mehta explained that the firm’s integrity screen, developed over more than a decade, uses more than 200 indicators tracking promoter behaviour, related-party transactions, disclosure quality, board independence and past governance patterns. The database built from this framework, he noted, has shown a steady decline in the pool of well-governed companies over the past 10–12 years. “Companies that fall into those grey areas simply don’t make it into the portfolio, even if they’re part of the index,” Mehta said.

Dayal noted that despite pressure to generate returns, Quantum avoids companies where governance concerns raise the risk of capital erosion. “There are some companies or groups which you don’t touch at all and they would probably have given you a very high return in the past,” he said. “But if me and the founder took the same risk, we should get the same return. There can’t be different outcomes — and in many companies in India, you know their names, there are different rates of return for founders.”

He said Quantum’s focus is on protecting investor capital. “We’re not chasing returns." Mehta added, “From a risk perspective, we look at volatility. These kinds of risks are not captured in that volatility. These are binary risks. Until they occur, everything’s fine. But when they occur, there’s direct, complete loss of capital. So it is very difficult to price and measure those risks. But they are very real risks that we see in investing.”

Speaking about India and global standards for corporate governance, Jen Sission, CEO of the International Corporate Governance Network (ICGN), said India remains a priority market for global capital. Representing more than 300 institutional investors and governance professionals across 40 countries — including some of the world’s largest sovereign wealth funds, pension plans and asset managers — Sisson said the organisation’s India focus reflects the country’s growing economic weight and rising interest among global asset owners to increase exposure to Indian markets.

During her visit, she met with SEBI, the Ministry of Corporate Affairs, the Reserve Bank of India, and both major stock exchanges. She noted that India’s regulatory framework is “very strong compared with developing markets,” and that policymakers expressed openness to learning from global best practices.

However, she emphasised that the gap between regulatory compliance and practical implementation remains a central concern for international investors. Issues such as board independence, director responsibilities, financial reporting quality and shareholder rights remain under scrutiny.

“Governance is not about ticking boxes. It is about judgment, accountability and long-term value creation. Global investors are eager to allocate more capital to India, but governance execution will determine how fast and how deep those flows go," Sission said.

She added that  ICGN’s India engagement is part of a broader effort to deepen dialogue between global asset owners and Indian regulators, boards and companies. India’s scale, she noted, makes it impossible for large international portfolios to ignore . Quantum is the first signatory to ICGN’s global stewardship code in India.

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