CORPORATE GOVERNANCE

REGIME IN INDIA

Ananya Srinath 17BLA1004

Yadu Krishna 17BLA1021
• Cadbury Committee defined "Corporate Governance" in its Report (Financial Aspects of Corporate
Governance, published in 1992) as "the system by which companies are directed and controlled".

• Corporate Governance refers to practices by which organisations are controlled, directed and
governed.

• 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.
• Components of Corporate Governance

• Explicit and implicit contracts between the company and the stakeholders for distribution of
responsibilities, rights and rewards.

• Procedures for reconciling the conflicting interests of stakeholders in accordance with their
duties, privileges and roles.

• Procedures for proper supervision, control, and information that flows to serve as a system of
checks and balances.
 Reports
Regulators

Statutory
Bodies

Laws, Codes
and
Regulations
Kotak Committee
• In June 2017, SEBI, constituted a high powered committee with the aim of improving
governance standards of Indian listed companies which came out with detailed
recommendations.
• The Kotak Committee suggested numerous amendments to the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, which will consequently impact all listed entities.

• Ceiling on maximum number of Directorships

• The separation of role of the chairperson and the MD / CEO
• eligibility criteria for Independent Directors
• Board Composition
• Effect on Related Party transactions
Importance of Corporate Governance in India

• Corporate governance safeguards not only the management but also the interests of
stakeholders and fosters the economic progress of India in the roaring economies of the
world. A company that has good corporate governance experiences much higher level of
confidence amongst the shareholders associated with that company.

• Confident and independent directors contribute towards a positive outlook of the company in
financial market which positively influences the share prices. Corporate Governance is one
of the important criteria for foreign institutional investors to decide on which company to
invest in.
The Stewardship Code, 2019

• The Stewardship Code, 2019 came into effect on 1 July 2020, and has been adopted by a
majority of the institutional investors in India.
• Third Code put in place to fortify the foundations of the stewardship responsibilities to be
undertaken by different institutional investors in India.