Corporate Governance in India

Posted: April 24, 2015 in Corporate Governance
Tags: , ,
Whether it is Satyam or Sahara scams the debacles in the corporate sector not only disturb a market, but also resist investors for capital inflows. To save the interest of stakeholders, market growth and economy of a nation, strict corporate governance is very much essential. The role of SEBI is very much important in this regard as it is the ultimate watchdog of the Indian stock market. Entrepreneurs, SEBI and Judiciary all have different opinions on Company Bill-2012. But, they all are thoughtful, that we required a more relevant corporate governance bill, relevant to the business practices and compliance system in India. Only a relevant model can make a tab on the frauds and malpractices in the long run and we have to adopt a system which may work for longer period.
According to  Narayana Murthy, Chief Mentor, Infosys Limited. “Corporate governance is maximizing the shareholder value in a corporation while ensuring fairness to all stakeholders, customers, employees, investors, vendors, the government and the society-at-large. Corporate governance is about transparency and raising the trust and confidence of stakeholders in the way the company is run. It is about the owners and the managers operating as the trustees on behalf of every shareholder – large or small.”

2003 was the landmark year in the Indian economy when the Ministry of Corporate Affairs, Government of India established the National Foundation for Corporate Governance with the collaborative efforts of the Confederation of Indian Industry (CII), Institute of Company Secretaries of India (ICSI) and Institute of Chartered Accountants of India (ICAI) for the promotion of  better corporate governance practices in India.

To attain economic stability and sustainable growth, Our country should strictly follow the Companies Bill-2012. A medium of good governance, framework of best practices and promoter of ethical business practices is a delayed but good initiative of Government of India. But, there are still a few things which need to be revised in the Companies Bill, 2012 as it is inspired from the UK model and there many dissimilarities in the nature of UK and Indian economy. India should follow a strict compliance system as almost twenty per cent of companies do not even comply with basic shareholding reporting norms set by the SEBI. For this we required more people and resources and their effective utilisation to scrutinise and govern the market.

Corporate Bill-2012 is an important initiative which is taken by the Government of India, but we need to make some required amendments in a realm of compliance systems and corporate laws.

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