Corporate Governance in India
Why in news ?
The Indian Institute of Corporate Affairs’ (IICA) organized the ‘Two-Day Familiarisation Programme for Independent Directors’ aimed at strengthening Corporate Governance in India.
What is Corporate Governance?
- Corporate governance, which refers to the system of rules, practices, and processes by which a company is directed and controlled, plays a crucial role in ensuring that businesses are run ethically and in the best interests of their stakeholders.
- One of the key responsibilities of corporate governance is to prevent corporate greed and ensure that businesses are operated in a responsible and transparent manner.
Guidelines for Corporate Governance At International Level
- Cadbury Committee Report-The Financial Aspects of Corporate Governance (1992).
- Greenbury Committee Report on Directors’ Remuneration (1995).
- Hampel Committee Report on Corporate Governance (1998).
- The Combined Code, Principles of Good Governance and Code of Best Practice, London Stock Exchange (1998).
- CalPERS’ Global Principles of Accountable Corporate Governance (1999).
- Blue Ribbon Report (1999).
- King Committee On Corporate Governance (2002).
Corporate Governance Initiatives in India
- In India, corporate governance initiatives have been undertaken by the Ministry of of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI).
- The first formal regulatory framework for listed companies specifically for corporate governance was established by the SEBI in February 2000, following the recommendations of Kumarmangalam Birla Committee Report. It was enshrined as Clause 49 of the Listing Agreement.
- Further, SEBI is maintaining the standards of corporate governance through other laws like the Securities Contracts (Regulation) Act, 1956; Securities and Exchange Board of India Act, 1992; and Depositories Act,
Importance of Corporate Governance
The term is highlighted whenever there are corporate frauds. Corporate Governance and Code of corporate governance calls for ethical and accountable corporate administration. The best practices of corporate governance are important not only for public or shareholders but also for the very existence of the company itself. Adopting corporate governance will increase the value, sustainability and long-term profits.
Source – The Hindu
