Page 19 - Life Insurance Today July - December 2020

3. Rise in hostile activities of predators (take over);
4. Insider trading;
5. Litigations against directors;
6. Need for restructuring of boards;

7. Changes in auditing practices.

Since the activities of even for Life Insurance Corporation
influence the workers, customers and society at large,
some of the accountability issues are concerned with social
responsibility that a corporation must shoulder. In India,
company legislation has until recently been the main
instrument for improving corporate governance. In India,
company legislation has until recently been the main
Ethical issues are concerned with the problem of fraud,
instrument for improving corporate governance.
which is becoming wide spread in capitalist economies.
Corporations often employ fraudulent means to achieve
New issues which Corporate Governance must
their goals. At times companies may resort to unethical
address today are:
means like bribes, giving gifts to potential customers and
lobbying under the cover of public relations in order to 1. The growth of private companies,
achieve their goals of maximizing long term vendor value. 2. The magnitude and complexity of corporate groups
3. Rise in hostile activities of predators (take over), etc.
Efficiency issues are connected with the performance of
4. Insider trading
management. Management is responsible for ensuring
return on investment made by shareholders. The issues 5. Litigation issues against the directors
relating to efficiency of a management is of concern to 6. Need for restructuring of boards
shareholders as there is no control mechanism through
which they can control the activities of the management, Subsequently incorporating the recommendations of the
whose efficiency is detrimental for returns on their Bhaba Committee, this Act legislated, among other things,
investments. the abolition of the system of managing agencies, an
institution that had served the country well during the early
In India, small shareholders are still an important source days of corporatization, but has fallen into disrepute
of capital for corporations as the mutual funds industry is through abuse and malpractice in its application by its
still emerging. The issues relating to efficiency of a latter day exponents. A formal effort was initiated by the
management is of concern to shareholders as there is no
CII when it produced a document titled "Corporate
control mechanism through which they can control the Governance - A Desirable Code" in 1998, through a Task
activities of the management, whose efficiency is Force headed by Mr. Rahul Bajaj, probably for the first time
detrimental for returns on their (shareholders) investments.
formally recognized the obligation of listed corporations to
The management of life insurer is accountable to its create wealth and distribute it among all their shareholders.
stakeholders. "Accountability issues" emerge out of the
stakeholders' need for transparency of management in the A similar initiative was mounted by SEBI with the
conduct of business. New issues which Corporate constitution of a committee under the chairmanship of Mr.
Governance addresses today are: Kumar Mangalam Birla and its report recommending
1. The growth of private companies; guidelines on corporate governance published in February,

2. The magnitude and complexity of corporate groups; 2000. It is a well-balanced compendium of good practices

"You don't choose who you fall in love with, but you do choose who you marry."

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