Government Responsibility

• Distribution of income
o Collection of tax
o Social welfare scheme
o Subsidy to poor
o Universal Health facility
o Universal Education facility
 Government Responsibility………
• Balancing Act
o Giving incentive to potential sector---(SME)
o Disincentives to unwanted sector
o Regulating Market participant
o Assuring competition in market (non-existence
of monopoly / oligopoly)
 Government Responsibility………
• Facilitator
o Maintaining growth environment
o Infrastructure development
o Assuring availability of all the factors of
production i.e. Land, Labour & Capital
o Maintaining good international relationship
o Maintaining good internal security
 Government Responsibility………
• Regulation
o Making law for all market participant to follow
o Assure fairness in business deal
o Maintaining law &order
o Judicial service
o Consumer Protection Act
 Government Control
• Prior to 1991-Industrial Policy.
• Factors of production
o Land:- Land Acquisition Bill
o Labour:- Labour Law
o Capital:- Free Flow of Capital Across Border
(Free Flow of Technology/ Idea/)
 1991 Economic Liberalisation
• LPG
o Liberalization
o Privatization
o Globalization
• Competition
• Free flow of Capital
• Free flow of Technology
• Free flow of Idea
 Government Role
• Controller to Regulator
• Participant to facilitator
 Issues
• Consumer Protection Act 1986
• Corporate Social Responsibility
• Government Regulation of Business Management
• Legal Environment
• Corporate Governance
• SEBI Code on Corporate Governance
• Mergers & Acquisition (Crisil acquiring CARE)
• Ethical Values
 Consumer Protection Act, 1986
• Requirement
• Objective
• Structure
• Scope
• Judiciary System
Requirement of Consumer Protection Act

• Consumers are:-
o Poor
o Disorganized
o Common consumers are less knowledgeable
o Financial affordability
o Judicial Process takes long time
 Objective of Consumer Protection Act

• Protection of consumer’s interest.

• Cheap and speedy justice.

• Establishment of consumer council

Objective of Consumer Protection Act……..
• Protection of consumer’s interest:-
 To accomplish this objective Consumer Protection Act recognizes six
consumer’s right:-
1) Right to be protected:- against marketing of goods which are hazardous
to life and property.
2) Right to the information:- about the quality, quantity, potency, purity,
standard and price.
3) Right to be assured:- access to a variety of goods at competitive prices.
4) Right to be heard:- due consideration at appropriate forums.
5) Right to seek redressed:- against unfair trade practices or unscrupulous
exploitation.
6) Right to consumer Education.
Scope of Consumer Protection Act……..
• Applicable in whole India except Jammu &
Kashmir.
• Apply on all goods and services unless, otherwise
provided by the Central Government’s
notification.
• Cover all sectors, namely:- private, public and
co-operative.
• Provisions of this Act are compensatory in
nature.
Structure of Consumer Protection Council

• The Consumer Protection Act provides for the

establishment of a Central Protection Council
by the Central Government and a state
consumer protection council in each state by
the respective State Governments.
 The Central Government Council
• Get established by Central Government Notification.
• Minister of Food and Civil Supplies of Union
Government will be Chairman.
• Numbers of other official or non-official members
representing such interest as may be prescribed by
Union Government.
• The council shall meet as and when necessary at the
same time three meetings in a year is mandatory to
take place.
The State Consumers Protection Council
• Get established by State Government Notification.
• Minister of Food and Civil Supplies of State
Government will be Chairman.
• Numbers of other official or non-official members
representing such interest as may be prescribed
by State Government.
• The council shall meet as and when necessary at
the same time two meetings in a year is
mandatory to take place.
Judiciary System as per Consumer Protection
Act
• District Consumer Forum
• State Commission
• National Commission
• District Consumer Forum is Lowest court.
• State Commission is higher than District
Consumer Forum but lower than National
Commission.
• National Commission is the Highest Court
 District Consumer Forum
• State Government will establish District Forum, in
each district. If required there can be more than one
forum in one district.
• Each District Forum shall have one president and two
members, one of whom shall be a woman.
• President should have equal qualification to a District
Judge.
• Every member can hold office for a term of five years
or up to the age of 65 years, whichever is earlier.
 District Consumer Forum
• District Forum can entertain complaints up to the
value of Rs. 20 lakh.
• District Forum have to disposes a complaint generally
within 3 months of the receipt of notice by opposite
party and time can get extended to 5 months if the
case requires analysis or testing of commodities by a
laboratory.
• Person can appeal to State Commission within 30
days from the date of order from the District
Consumer Forum.
 State Commission
• Each State Commission shall have one
president and at least two members, one of
whom shall be a woman.
• President should have equal qualification to a
High Court Judge.
• Every member can hold office for a term of
five years or up to the age of 67 years,
whichever is earlier.
 State Commission
• State Commission can entertain complaints which claim
value exceeds Rs. 20 lakh but does not exceeds Rs. 1 Crore.
• Besides it shall entertain appeals against the orders of any
District Forum within the State.
• State Commission have to disposes a complaint generally
within 3 months of the receipt of notice by opposite party
and time can get extended to 5 months if the case requires
analysis or testing of commodities by a laboratory.
• Person can appeal to National Commission within 30 days
from the date of order from the State Commission.
 National Commission
• National Commission shall have one president
and at least four members, one of whom shall
be a woman.
• President shall be a person who is or has been
a judge of supreme court.
• Every member can hold office for a term of
five years or up to the age of 70 years,
whichever is earlier.
 National Commission
• National Commission entertain appeals
against the orders of any State Commission.
• National Commission enjoys all powers which
are enjoyed by a civil court.
• Person can appeal to Supreme Court within 30
days from the date of order from the National
Commission.
 Social Responsibility of Business
• Principles underlying Social Responsibility
• Need for Social responsibility
• Conflict of views
 Principles of Social Responsibility

• The Stewardship Principles

• The Charity Principles

 Help business in long term
 Has more resources than others
 Educational Institute------capable labor to
business
 Impact of Social Responsibility
• Less government regulation and control
• Eliminate class conflict in society
• Moral Responsibility
• Good public image of business owners
• Improve usability of national resource
 Social Responsibility is Business
Responsibility
• Business persons are socially powerful
• Moral responsibility
• Civic duties and responsibilities
• Expectation from business has changed
• Has vast pool of resources
• Create growth environment for business
• Improve public image of business
• Less government intervention required
 Social Responsibility is Not Business
Responsibility
• Maximize Profit
• No direct accountability towards society
• Non availability of social skill
• Cost burden
• Adverse impact on economic efficiency
Social responsibility of the business is two side
sword
 Embedded VS Peripheral CSR
• Embedded CSR involves an organization's core
competencies and integrates CSR within a
firm's strategy, routines, and operations, and
therefore affects all employees.
• Peripheral CSR focuses on activities that are
not integrated into an organization's strategy,
routines, and operations (e.g., philanthropy,
volunteering).
 Business Ethics
• Good intention
• Theology based
• Goals and means
• Different from social responsibility
• An art
• A science
• Business ethics is natural outcome not emotional
outburst
• Study of human aspects
 Corporate Governance
• Corporate governance is the system of rules, practices and
processes by which a company is directed and controlled.
• Corporate governance essentially involves balancing the
interests of a company's many stakeholders, such as
shareholders, management, customers, suppliers, financiers,
government and the community.
• Since corporate governance also provides the framework for
attaining a company's objectives, it encompasses practically
every sphere of management, from action plans and internal
controls to performance measurement and
corporate disclosure.
 Corporate Governance…….
• The board of directors is pivotal in governance, and
it can have major ramifications for equity valuation.
• Failure:- Satyam Computer, Sahara India, JVG
Finance, Enron, Rcom etc.
• Recent controversy:- Tata Sons, Infosys.
• Success:- Mahindra & Mahindra, Bajaj, Aditya Birla
group, Tata, Infosys, Wipro etc.
 What is Corporate Governance ?

Corporate Governance refers to the structures &

processes for the efficient & proper direction
& control of companies (both private and
public) in the interest of all stakeholders.
 Corporate Governance
• Corporate governance is the system of rules, practices and
processes by which a company is directed and controlled.
• Corporate governance essentially involves balancing the
interests of a company's many stakeholders, such as
shareholders, management, customers, suppliers, financiers,
government and the community.
• Since corporate governance also provides the framework for
attaining a company's objectives, it encompasses practically
every sphere of management, from action plans and internal
controls to performance measurement and
corporate disclosure.
 Corporate Governance…….
• The board of directors is pivotal in governance, and
it can have major ramifications for equity valuation.
• Failure:- Satyam Computer, Sahara India, JVG
Finance, Enron, Rcom etc.
• Recent controversy:- Tata Sons, Infosys.
• Success:- Mahindra & Mahindra, Bajaj, Aditya Birla
group, Tata, Infosys, Wipro etc.
 Corporate Governance…….
• - Is a concept; one size does not fit all,
HOWEVER:
• - Basic Principles of Corporate Governance:
 Accountability Rights of Shareholders
 Transparency Interests of Stakeholders
 Fairness Good Faith Diligence
 Integrity Trust Disclosure
 Responsibility Controls Commitment
History of Corporate Governance in India Till
Date
• The first Corporate Governance code for companies in
India--- ‘Desirable Corporate Governance: A Code’---
was released by the CII (Confederation of Indian
Industry) in 1997, by a task force under Chairmanship
of Mr. Rahul Bajaj and won kudos from the press.
• In 1999, SEBI (Securities and Exchange Board of India)
constituted a committee under Kumar Mangalam Birla.
• SEBI committee drafted a code of corporate governance
remarkably similar to the CII’s.
History of Corporate Governance in India Till
Date…………
• In 2000, SEBI used this to introduce the first official corporate
governance code through Clause 49 of the Listing Agreement.
• In 2005 SEBI Code was updated, based on recommendations
of the NR Narayan Murthy Committee.
• Then came the ministry of corporate affairs (MCA). In 2009, it
drafted a new Companies Bill. After active debates over
different versions of the Bill, it was finally passed as the
Companies Act, 2013 (CA 2013). The new law, while
improving some areas of governance, also carried several
draconian provisions and restrictions. In any event, it became
the law of the land for Indian companies.
History of Corporate Governance in India Till
Date…………
• Market regulator Securities and Exchange Board of
India (SEBI) in 2014 approved a new corporate
governance code aimed at improving transparency
and disclosure standards of listed companies in India.
• Thereafter, SEBI came out with a detailed Listing
Obligations and Disclosure Requirements Regulations
(LODR), in 2015.
• Then, on October 5, 2017, the report of the Sebi
Committee on Corporate Governance chaired by Uday
Kotak was released.
Corporate Governance Framework

• Governance Principles
• Legal / Regulatory
• Codes of Best Practice
• Stakeholder Relations
• Self Regulation
• Ethical Standards
• Risk Management
 Why Corporate Governance Matters

 Enhances performance of companies

 Enhances access to capital
 Enhances long term prosperity.
 Provides a barrier to corrupt dealings- limiting
discretionary decision making, increasing
oversight, introducing Codes of Ethics etc
 Impacts on the society as a whole:
“Better companies, Better societies”.
 Good Corporate Governance and Good
Public Governance are complementary
“ The proper governance of companies will
become as crucial to the world economy as
the proper governing of countries”.
James Wolfensohn
President of WB, 1999
 Corporate Governance-
Channel of Growth & Development

Country level

Sector level

Individual firms
 Corporate Governance-
Channel of Growth & Development
• Increases access to external financing leading
to larger investment, high growth & creation
of more jobs
• Better allocation of resources
• Better management creating wealth
• Reduces the risk of financial crisis
• Better relationship with all stakeholders
Good Corporate Governance, Good Government
& Good Business go hand in hand

• Good Governance by Host Country

• Good Governance by Private Sector
• Good Governance by Investment Promotion
Agencies
• Good Governance by Investors
Good Governance by Host Country
 Transparent, stable and predictable
investment climate:
• Appropriate legislation to support investment
• Anti corruption measures
• Effective , speedy and transparent resolution
of disputes
• Forum for Investors
• Capacity Building
 Good Governance by Private Sector

• Institutional Framework
• Role of Board of Directors
• Management
• Risk factors
• Transparency & Disclosure
• Reputation
Good Governance by Investment Promotion
Agencies

• Self Regulation
• Transparency & Disclosure
• Accountability
• Commitment
• Sound and Clear Administrative Policies
• Stakeholder engagement
 Good Governance by Foreign Investor

• Good faith
• Business Integrity
• Governance Policies
• Human Capital
• Corruption Practices
 Recommendations

• Continued advocacy on the benefits of Corporate

Governance
• Codes of Corporate Governance for countries
• Self Regulation Capacity
• Sourcing of funds to support Corporate
Governance development.
• Every institution , every stakeholder should
provide input into the corporate governance
agenda
 Conclusion
• If a country does not have a reputation for strong corporate
governance practice, capital will flow elsewhere.
• If investors are not confident with the level of disclosure, capital
will flow elsewhere.
• If a country opts for lax accounting and reporting standards,
capital will flow elsewhere. All enterprises in that country
regardless of how steadfast a particular company’s practices may
be- suffer the consequences.
• Markets exist by the grace of investors. And it is today’s more
empowered investors that will determine which companies and
markets will stand the test of time and endure the weight of
greater competition.
• It serves us well to remember that no market has a divine right
to investors’ capital
 SEBI on Corporate Governance
• Providing more clarity on how Indian companies are run is
part of the government’s agenda to attract retail investors
back into stocks. These investors have been heavy sellers
since 2008 because of lack of trust in India’s volatile markets.
• The changes, due to come into effect from October 1, 2014
was supposed to make it mandatory for companies to put in
place a whistleblower policy, which would establish a
process through which employees can report to
management concerns about unethical behaviour, or
suspected fraud or violation of the company’s code of
conduct or ethics policy.
 SEBI on Corporate Governance
• 03/02/2014- MUMBAI (Reuters) - Market regulator Securities and
Exchange Board of India (SEBI) on Thursday approved a new corporate
governance code aimed at improving transparency and disclosure
standards of listed companies in India.
• Providing more clarity on how Indian companies are run is part of the
government’s agenda to attract retail investors back into stocks. These
investors have been heavy sellers since 2008 because of lack of trust in
India’s volatile markets.
• The changes, due to come into effect from October 1, would make it
mandatory for companies to put in place a whistleblower policy, which
would establish a process through which employees can report to
management concerns about unethical behaviour, or suspected fraud
or violation of the company’s code of conduct or ethics policy.
SEBI on Corporate Governance…….
• The code also requires companies to disclose how they decide
remuneration for their top management.
• It also puts restrictions on the maximum number of boards that
one individual would be allowed to sit on and also makes it
mandatory for at least one woman to be represented on a
company’s board of directors.
• The rules are in line with India’s new companies law that was
ratified last year and was designed to enhance shareholder rights.
• The SEBI has stepped up its rules to protect small investors as well
as to reduce the power held by so-called “promoters” of a
company, or key stakeholders who have a disproportionate say on
management appointments and day-to-day operations.
SEBI on Corporate Governance…….
• In 2013, SEBI asked stock exchanges to beef up their
compliance departments to ensure that companies make
proper disclosures of market sensitive information, while a
new insider trading law is also in the works.
• Also, SEBI proposed new measures aimed at helping
India’s mutual funds industry, including higher tax
incentives for equity funds and a proposal to allow India’s
state-owned pension fund to channel money into mutual
funds.
• India’s domestic equity funds have seen net redemptions
of 310.14 billion rupees since April 2008.
SEBI on Corporate Governance…….
• Formation of Committee on Corporate Governance
• SEBI has set up a committee under the Chairmanship of Shri Uday
Kotak, Executive Vice Chairman and Managing Director of Kotak
Mahindra Bank to advise on issues relating to corporate
governance. The other members of the committee are the
representatives of Corporate India, stock exchanges, professional
bodies, Investor groups, Chambers of commerce, law firms,
academicians and research professionals and SEBI. 
• Terms of Reference of the Committee:
SEBI on Corporate Governance…….
• The Committee shall make recommendations to SEBI on the
following issues with the aim of improving standards of
corporate governance of listed companies in India:

1. Ensuring independence in spirit of Independent Directors

and their active participation in functioning of the company;
2. Improving safeguards and disclosures pertaining to Related
Party Transactions; 
3. Issues in accounting and auditing practices by listed
companies;
4. Improving effectiveness of Board Evaluation practices;
SEBI on Corporate Governance…….
5. Addressing issues faced by investors on voting
and participation in general meetings; 
6. Disclosure and transparency related issues;
7. Any other matter, as the Committee deems fit
pertaining to corporate governance in India.
The committee shall endeavour to submit the
report within a period of four months.
 Out Come of SEBI Committee Headed by
Kumar Mangalam Birla
• Recommended five board meetings every year and
there cannot be a gap of more than 120 days between
two consecutive meetings.
• Recommends topics that to be discussed at the board,
such as strategy, succession planning, risk management,
environment, sustainability and governance.
• A listed company must disclose the competencies of its
board members in a matrix form vis-à-vis every
identified competency/expertise the company or the
sector might need.
 Out Come of SEBI Committee Headed by
Kumar Mangalam Birla………
• All listed entities disclose observations of
board evaluation of the year and proposed
actions to be taken; and the previous years
observations and what actions were taken.
• For listed entities where public shareholding is
at least 40% of the voting stock (and for all
listed companies from 1 April, 2022), the
chairperson must be a non-executive director.
 Out Come of SEBI Committee Headed by
Kumar Mangalam Birla………
• There be guidance to listed entities to disclose
their medium- and long-term strategy in their
annual reports under Management Discussion
and Analysis, and also articulate a clear set of
long-term metrics specific to the company’s
strategy to allow for appropriate measurement
of progress.
• Increasing the minimum number of audit
committee (AC) meetings from four to five.