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Internationally, there has been a great deal of debate going on for quite some time. The famous Cadbury Committee defined "Corporate Governance" in its Report Financial Aspects of Corporate Governance, published in as "the system by which companies are directed and controlled".
The Organisation for Economic Cooperation and Development OECDwhich, inpublished its Principles of Corporate Governance gives a very comprehensive definition of corporate governance, as under: Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.
Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and shareholders, and should facilitate effective monitoring, thereby encouraging firms to use recourses more efficiently. The fundamental concern of Corporate Governance is to ensure the conditions whereby organisation's directors and managers act in the interest of the organisation and its stakeholders and to ensure the means by which managers are held accountable to capital providers for the use of assets.
To achieve the objectives of ensuring fair corporate governance, the Government of India has put in place a statutory framework. Regulatory framework on corporate governance The Indian statutory framework has, by and large, been in consonance with the international best practices of corporate governance.
The Companies Act, inter alia contains provisions relating to board constitution, board meetings, board processes, independent directors, general meetings, audit committees, related party transactions, disclosure requirements in financial statements, etc.
SEBI is a regulatory authority having jurisdiction over listed companies and which issues regulations, rules and guidelines to companies to ensure protection of investors. Standard Listing Agreement of Stock Exchanges: For companies whose shares are listed on the stock exchanges.
ICAI is an autonomous body, which issues accounting standards providing guidelines for disclosures of financial information. Section of the New Companies Act inter alia provides that the financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under s of the New Companies Act.
It is further provided that items contained in such financial statements shall be in accordance with the accounting standards. These Secretarial Standards have come into force w. Section 10 of the New Companies Act provide that every company other than one person company shall observe Secretarial Standards specified as such by the ICSI with respect to general and board meetings.
The New Act has greater emphasis on corporate governance through the board and board processes. The New Act covers corporate governance through its following provisions: New Companies Act introduces significant changes to the composition of the boards of directors.
Every company is required to appoint 1 one resident director on its board. Nominee directors shall no longer be treated as independent directors. Listed companies and specified classes of public companies are required to appoint independent directors and women directors on their boards.
New Companies Act for the first time codifies the duties of directors.
Listed companies and certain other public companies shall be required to appoint at least 1 one woman director on its board.
New Companies Act mandates following committees to be constituted by the board for prescribed class of companies:E-governance also results in job losses, and many low-rung jobs getting replaced by a few high-rung jobs. This is disadvantageous for those who lose jobs. Overall, though, e-governance is the way of the future, and future can't be prevented from happening.
National Portal of India is a Mission Mode Project under the National E-Governance Plan, designed and developed by National Informatics Centre (NIC), Ministry of Electronics & Information Technology, Government of India. It has been developed with an objective to enable a single window access to information and services being provided by the various Indian Government entities.
India has faced some challenges in terms of aligning corporate governance with an evolving business environment. Following several public and high-profile governance lapses, the Securities and Exchange Board of India (SEBI) appointed the “Kotak Committee” to review corporate governance principles.
India’s technology opportunity: Transforming work, empowering people McKinsey Global Institute Perspectives on e-governance McKinsey. India’s technology opportunity: Transforming work, empowering people McKinsey Global Institute. For work. The reason I chose such a title is due to the difficulty of mainstreaming (i.e., understanding and institutionalizing) the emerging conception of communication in development required to support and address the challenges in the current process of democratization, especially when dealing with governance issues.
Gregory is a partner and co-global coordinator of the Corporate Governance and Executive Compensation group at Sidley Austin LLP.
This post is based on an article that originally appeared in Practical Law The Journal.