Page 45 - Banking Finance April 2023

ARTICLE

21st century, the focus of corporate governance was to best practices that have been developed by industry groups
include a greater emphasis on sustainability, social and other organizations. Some of the major concepts are
responsibility, and long-term value creation. In the 21st discussed below -
century, corporate governance has become a global issue,
with an emphasis on corporate social responsibility and
Concept of "shareholder democracy"
sustainable business practices.
One of the key principles of corporate governance in India
is the concept of "shareholder democracy." This principle
Legal Framework for Corporate Gover- holds that shareholders have the right to elect the members
nance in India of a company's board of directors and to approve major
corporate decisions, such as mergers and acquisitions,
The legal framework for corporate governance in India is
capital raises, and dividend payments. Shareholder
governed by a number of laws and regulations, including the
democracy is intended to ensure that companies are run in
Companies Act, 2013, the Securities and Exchange Board
the best interests of their shareholders and that the rights
of India (SEBI) Listing Obligations and Disclosure
of minority shareholders are protected.
Requirements Regulations, 2015 and the National Voluntary
Guidelines on Social, Environmental and Economic
Concept of "Disclosure and Transpar-
Responsibilities of Business (NVGs).
ency"
The Companies Act, 2013 is the primary legislation that
Another important principle of corporate governance in India
governs the operations of companies in India, and it includes
is the concept of "disclosure and transparency." This
provisions on corporate governance, such as the
principle holds that companies must disclose accurate and
appointment of independent directors, the formation of
timely information about their financial performance and
audit committees, and the rights of shareholders.
operations to shareholders and other stakeholders.
Disclosure and transparency are intended to ensure that
The SEBI Listing Obligations and Disclosure Requirements
shareholders and other stakeholders have the information
Regulations, 2015 require listed companies to comply with
they need to make informed decisions about the companies
certain corporate governance norms, such as the
in which they invest.
appointment of independent directors, the formation of
audit committees, and the requirement for timely disclosure
Concept of "Accountability and Respon-
of financial and other relevant information to shareholders
and investors. sibility"
A third principle of corporate governance in India is the
The NVGs, issued by the Ministry of Corporate Affairs in
2011, are non-binding guidelines that provide a framework
for companies to adopt sustainable and responsible business
practices. The guidelines cover areas such as corporate
governance, environment, social responsibility, and
economic responsibility.

Governing Principles of Corporate Gov-

ernance in India
The governing principles of corporate governance in India
are grounded in the principles of fairness, transparency, and
accountability. These principles are reflected in the various
laws and regulations that govern the operations of
companies in India, as well as in the codes of conduct and

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