Corporate Governance Abuses and the Ownership Structure of Indian Companies

Abstract

Attempt of made in this paper to understand the credibility of corporate governance regulations in India after making necessary changes in the Companies Act, 2013 and Clause 49 of Listing Agreement. The significance of this attempt is the corporate governance failure in top rated companies in India such as Tata Sons Limited, Infosys Limited and Ricoh India Limited in the year 2016. From the analysis on top 200 companies listed with NSE, using simple percentage, it is found that the reason for the governance failure in Indian companies is due to the blind adoption of the features of the Anglo-Saxon model of corporate governance into the Indian corporate governance code. One major outcome of the analysis is the strong dominance of majority shareholders in the ownership structure of Indian companies irrespective of the nature of dominance viz. The government of India, Indian promoter, or a foreign promoter. The majority of the companies taken up for the study is dominated by the promoter and promoter group thereby significance of the board and the independence of the board are sidelined by the dominant shareholders, leading to governance crisis in Indian companies.