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Corporate Governance in India: Challenges and Solutions, Assignments of Corporate Governence

M.S. Ramaiah University of Applied SciencesCorporate Governence

The Indian model of corporate governance and its effectiveness in the current context. It highlights the issues with the current system, such as the integration of founder and company identities and the need for a value-based corporate culture. The document also suggests ways to improve corporate governance, including the importance of independent directors and the role of ethics in balancing profit-making intentions. Furthermore, it explores the development and working of Clause 49 of SEBI Guidelines on Corporate Governance and relates it to the Tata-Mistry Controversy.

What you will learn

  • What role do independent directors play in improving corporate governance in India?
  • What are the challenges facing corporate governance in India?
  • How can ethics be balanced with profit-making intentions in corporate governance?

Typology: Assignments

2020/2021

Uploaded on 12/13/2022

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CERTIFICATE COURSE ON
INTRODUCTION TO
CORPORATE GOVERNANCE
ANALYTICAL QUESTIONS [Within 200 Words]
10 Marks each
1. Is the Indian Model of the corporate governance fruitful in the current context?
Highlight some prominent suggestions that may be implemented to bring a
productive ethical and transparent corporate governance?
Answer 1. In its foundational sense, corporate governance refers to a system of rules, laws,
and guidelines which affixes the functioning of businesses as a directory to operate and
regulate effectively. They are well-structured, non-ambiguous and compliant by ilk. As it
stands, India's corporate governance is characterized by predetermined board committees
encompassing auditors, nomination and remunerating committees, and risk management
committees that serve to maintain the core principles of accountability, transparency,
responsibility and fairness.
Course on Introduction to Corporate Governance (ASSIGNMENT)
The LAW Learners 1 | P a g e
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CERTIFICATE COURSE ON

INTRODUCTION TO

CORPORATE GOVERNANCE

ANALYTICAL QUESTIONS [Within 200 Words]

10 Marks each

1. Is the Indian Model of the corporate governance fruitful in the current context? Highlight some prominent suggestions that may be implemented to bring a productive ethical and transparent corporate governance? Answer 1. In its foundational sense, corporate governance refers to a system of rules, laws, and guidelines which affixes the functioning of businesses as a directory to operate and regulate effectively. They are well-structured, non-ambiguous and compliant by ilk. As it stands, India's corporate governance is characterized by predetermined board committees encompassing auditors, nomination and remunerating committees, and risk management committees that serve to maintain the core principles of accountability, transparency, responsibility and fairness. Course on Introduction to Corporate Governance (ASSIGNMENT)

The underlying function of corporate governance has been challenged due to limitations in its implementation over the years. To provide an example: Members of the family are appointed to boards and panels, resulting in improper operation in terms of functionality. In order to create a productive ethical and transparent corporate governance, appropriate measures must be taken.

  1. It is imperative that adequate monetary and logistic resources be used to help create awareness and facilitate data protection.
  2. The identity of the Founder and that of the company should not be integrated. Additionally, they should pay attention to the credentials of their recruiters affixing transparency and fairness.
  3. The mindset of the people and organizational culture is perhaps one of the largest challenges we face towards better corporate governance. Maximizing functionality and transparency requires a value-based corporate culture coupled with a holistic view of human resources.
  4. Discuss ways in which the principles of ethics (in observing corporate governance) can be balanced with that of the profit-making intention of the companies. Answer 2. corporate governance can be defined as a method to create wealth in an ethical and legal manner. The organization's mandate ensures not only justice, fairness, and equity, but also accountability. Corporate governance should be focused on fulfilling the best interests of all its members by preserving the highest ethical standards. Corporate governance is supported by three systems that ensure structural reliability.
  5. Internal governance
  6. Board of directors
  7. Transparency and ethics The accountability of the governance is enhanced through sets of committees such as the audit committee, nominations and remuneration committee, and risk management committee. It should be noted that a company's major objective is to generate profit without affecting the interests of other shared groups. Therefore, for stakeholders to entrust a business, the modus operandi of an organization must be fully disclosed. Course on Introduction to Corporate Governance (ASSIGNMENT)
  1. Analyse in brief, the development and working of Clause 49 of SEBI Guidelines on Corporate Governance. Answer 4. Clause 49 " of the “Listing agreement” Provides a comprehensive outline of corporate governance practices. Under Clause 49 of the SEBI Act, and in accordance with the Companies Act 2013, India has established certain regulations and norms regarding corporate governance, which includes:
  2. Composition of Board
  3. non-executive directors’ compensation and disclosures.
  4. Board Procedure
  5. Roles and liabilities of independent directors.
  6. Roles and Powers of the Audit Committee
  7. Board Disclosures –Risk management
  8. Nomination and Remuneration committee. A. composition of the board: Chairman Executive Director 1/2 of the Board shall be Independent Director Chairman Non-Executive Director 1/3rd of Board shall be Independent Directors. B. Non-executive directors’ compensation and disclosures Compensation for non-executive directors shall be set by the board with shareholder's approval before it is implemented C. Roles and Powers of the Audit Committee Audit committees are comprised of both internal and external auditors who oversee financial reporting, choose independent auditors, and review audit reports. The Audit Committee shall consist of a minimum of three directors. Course on Introduction to Corporate Governance (ASSIGNMENT)

D. Nomination and Remuneration committee The committee's role is to formulate the criteria for determining the qualifications, positive attributes, and independence of Directors, and to recommend remuneration. Nomination & Remuneration Committee shall be constituted by the company which shall comprise at least three directors and half of the members shall be Independent Directors. E. Board Disclosures –Risk management Regulatory bodies for risk management, assessment, and minimization of risk shall be established by the company. In addition to this, the board shall be responsible for framing, implementing and monitoring the management plan. In conclusion, this clause emphasizes that the company must be fair towards its stakeholders. The company is required to protect the interests of its stakeholders as they have social and financial interests in the company.

  1. Discuss the Tata-Mistry Controversy and relate it to the role of Corporate Governance in a Company. Answer 5. Corporate governance is necessary to protect the interests of all stakeholders. It is important that majority shareholders ensure that their use of power does not adversely affect the rights of minority shareholders for the proper functioning of the corporation. The Companies Act, 2013 addresses oppression and management in a company. Typically, removing someone from a company is only an option if the person is being oppressed or mismanaged. The Securities Exchange Board of India ("SEBI") enhances the roles, responsibilities and liabilities of independent directors in India. According to the Uday Kotak Committee on Corporate Governance report, independent directors strengthen corporate governance worldwide by providing objectivity to the board and by balancing shareholders' interests with those of promoters and other stakeholders, especially minority shareholders. Also, independent directors augment board effectiveness. In addition to taking part in decision making, independent directors have to stay abreast of non-independent directors, evaluate the management team, ensure better corporate Course on Introduction to Corporate Governance (ASSIGNMENT)