Corporate Governance in India: Change and Continuity
Asish K Bhattacharyya (Ed)
Oxford University Press
308 pages; Rs 895
Given the current controversies within India’s biggest and most respected corporate group, this book, a neat compilation of 14 essays from eminent academicians and practitioners, is unwittingly well-timed. The essays highlight areas of topical interest in Indian corporate governance, discussing the need for corporate governance, the evolution of the Companies Act, 2013, the philosophy behind the current disclosure regime, the one-woman director mandate, corporate governance at state-owned enterprises, the role of independent directors, executive compensation, related-party transactions, audit and integrity of financial reporting. The tensions between the shareholders and managers is discussed in various chapters.
The first three essays discuss the origin of corporate governance, the evolution and the status of corporate governance in India building the ground for later essays. The essay on enabling laws and enforcement asks the provocative question: Do ethics make good business sense? Using anecdotal evidence and studies in other countries, it infers that corporate India should pay more attention to ethical values and practices not only to improve its bottom line but also to contribute to the larger social good. The essay also discusses the role of corporate fraud and corruption. The essay talks about recent changes in regulations and concludes on a positive note that the changes have the potential to change the ethical landscape in India.
Since corporate social responsibility (CSR) by companies has been mandated for the first time, this book devotes two essays to CSR. The first essay discusses the legal structure of CSR in India. The second essay discusses an emerging regulatory and institutional paradigm of CSR in India along with the implications for stakeholders.
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The essay on State Owned Enterprises (SOEs) throws up the question of whether corporate governance norms are adequate. The case of ONGC’s disinvestment by the government of India and LIC’s subscription of the sale is taken as an example of the governance malaise in SOEs. It argues that the government should address the governance concerns to widen the shareholder base of SOEs.
An essay is dedicated to the emerging role of independent directors in the boardroom. The new Companies Act, 2013 has enhanced the role and responsibilities of independent directors and also mandated various requirements on their selection, qualification, training and evaluation. The need for and the challenges that arise as a result of these requirements are duly reflected in the essay.
One of the current hot topics in global corporate governance is executive compensation. This has been duly discussed in an essay, in the Indian context. While talking of the various factors influencing executive compensation, this essay also presents a study and its findings on statistical analysis of compensation of chief executive officers of the top 100 NSE-listed companies from 2008 to 2012.
One of the visible additions of the Companies Act, 2013 was the mandatory representation of women on corporate boards. There was debate and opposition from corporate India due to the challenges faced in appointing “women directors”. Absence of a women director pool has resulted in token appointments to the Board which often includes women promoter members. An essay has duly covered this issue of the challenge of nominating able women directors to Boards and the creation of a national database of women directors.