Issues of Good Governance in Indian Corporate World

Abstract

Corporate governance is traditionally defined as the system of laws, regulations and practices, to promote enterprise, accelerate performance and ensure accountability and to run the business in a manner that enhances stakeholder’s value. We are fortunate that one of the world’s most complete manuscripts on the science of Governance was penned by Kautilya, the most celebrated scholar of ancient India. Imagine the vision of this eminent scholar in third century B.C., his discussions on administration and management are strikingly modern and scientific which covers almost all aspects of Governance which are relevant even in the present days. According to him, and which in fact is, the crux of the truth about an ideal king, is summed up in four Sanskrit lines which is translated below. Which means that “In the happiness and well being of the subjects , lies the well being of the king , in the welfare of the subjects , is the welfare of the king ; what is desirable and beneficial to the subjects and not his personal desires and ambitions , is desirable and beneficial for the king.” Inspite of having all set definitions of corporate governance from the ancient Indian manuscripts to latest management fundamentals, we are still struggling with the bad question of Good Governance in Indian corporate world. Some unpleasant developments taking place in Indian corporate world have led us to think again on good corporate Governance. The “SATYAM” matter raised big issues for good Governance. It also raised issues for accountants for a better transparency in balance sheets and annual reports. The tendency of window dressing led to loss of faith in persons dealing with accounts and chartered accountants who were entrusted the task of furnishing annual reports to public at large. Enron’s debacle is another great example of problem of governance which included independence of auditors, audit committee functioning, and accounting obfuscination. After some major unpleasant episodes all over the world including India, matter was debated and researches concluded that it was the result of lack of integrity of some of chief executive officers or chief financial officers. Some issues that often come up in good governance are honesty, ethics, morality, dharma, justice, integrity, values, credibility etc. The formation of a new government in Delhi has arisen new hopes among the Indian Public that the political system will also gear up to this revolutionary change and will lead to better ethics, moral examples to new generation for a good Governance. Increasing number of cases of failure of good governance in Indian corporate world lead us to think that some exemplary punishment and decisions in such cases are awaited or the strong political will to curb such activities by any way i.e. by enacting or modifying penalties for such criminals which play with public money. A large number of companies after raising money through share market, have vanished from the scene , after duping a huge money of the stakeholders within last 3-5 years, just because of lack of Good Governance and ethics and poor control by regulator. Indian judiciary has given very good decisions in some other crimes and some exemplary decisions in corporate fraud cases are necessary to stop such recurrence. The new Indian Companies Act of 2013 has introduced many intelligent and innovative measures and provisions for betterment in the corporate governance in all economic sectors of India. These corrective and prudent rules, regulations, and provisions of the CA-2013 seek to enhance active involvement of the shareholders in efficient and transparent corporate governance, place top responsibilities on entrusted and considerate management personnel, safeguard interests of shareholders and the society, and equip the corporate world of India for progressing fast at par with the roaring economies of the world. Clause 49 dealing with Corporate Governance is very comprehensive, and if implemented in good spirit, may result in better transparency in the interest of stakeholders, the ultimate beneficiaries. It is hoped that Companies act 2013 may bring more values in the Indian Corporate Governance.