Strengthening Corporate Governance in India - A Review of Legislative and Regulatory Initiatives in 2013

Abstract

The passing of the long awaited Companies Act in 2013 is probably the single most important development in India’s history of corporate legislation, next only to the monumental Companies Act 1956 which it replaces. While significant improvements have been effected in required standards of corporate governance, there is also some concern of possible overreach making life more difficult for companies as well as their independent directors. Among the major provisions of the Act are those of restraining voting rights of interested shareholders on related party transactions, recognition of board accountability to stakeholders besides shareholders, and extension of several good governance requirements to relatively large unlisted corporations. The paper is organized in three sections. Section I briefly documents the evolution of corporate governance in the country; section II sets out how some of the key governance objectives are sought to be addressed by the Initiatives; and section III concludes highlighting some areas that still need further strengthening.