Globalization has been accepted as new economic mantra for the world economic progress. Globalization not only heightens the business risks, but also compels the organization to adopt norms of transparency & good governance. The concept of Corporate Governance and Corporate Social Responsibility have been emerging as a response to corporate failure and also as response to lack of due diligence and care in supervising executives & offices. Corporate governance is a system by which companies are governed and controlled.1
There are three essential elements of corporate governance :
a. Transparency
b. Accountability
c. Accountability for stake holder
Since 1970 corporate governance is the subject of debate around the world. Needs of corporate governance has been realized mostly offer World War II. The East Asian Financial crisis in 1997 and lack of corporate governance mechanism in these countries highlighted the weaknesses of the institutions in their economic progress. In early 2000 the massive bankruptcies had occurred in various countries. All these are the reasons of emergence of concept corporate governance. The concept of corporate governance has been developed and reformed by the various committees report all over the world,e.g. Cadbury Report-U.K.,1995; Greenbury Reports- U.K.,1995; Voluntary code of corporate governance-1998, India; Kumar Mangalam Birla Committee Report- India, 1999; Sarbanes oxly Act,2002, Narayan Murthy Committee Report, India, 2003, J.J. Irani Committee Report, 2005 etc.
1.Cadbury Committee Report
In India the idea of corporate governance has been shaped from Socio-Economic environment. In India corporate governance has sprung into prominence due to several reasons e.g. the process of globalization & liberalization, invitation to foreign investments etc. The first initiative towards extent of corporate governance policy was brought by `confederation of Indian Industries. Narayan Murthy Committee Report (2003) , J.J. Irani Committee Report have a significant role. Cl.49 of Listing Agreement, S.217(1) & S.299 of Companies Act ,1956, SEBI insider trading regulation, SEBI Esop guidelines, SEBI unfair Trade Practices Regulation, 2003 all these have been playing an important role to develop & organize concept of corporate governance.
Conclusion:
Corporate governance is no longer luxury but a necessity. It is true that though corporate governance has accepted several responses from the various countries of world, there is no unique structure of corporate governance. Various countries have been facing Corporate scams e.g. in U.S. A. Worldcom, Enron, Tyco, Marcone etc have faced scams. In India, Scandal of Harshad Mehta, Keton Parekh, UTI, Ril, Satyam Computer Service Limited, have created a crisis of investors confidence. India is facing challenges to regulate norms of corporate governance these are family controlled business in a majority of companies being prevalent in India, lacking of due diligence in executive function, non-transparency in corporate governance norms. All these pose a serious problem for share holders & for public and mostly for economic growth of the countries.
There must be adequate enforcement of existing law. Listing Agreement should be more explicit in laying down guidelines about-
(i) The determination of remuneration packages of non-executive director.
(ii) The role of international investor in corporate governance.
It is also suggested to attach a statement of directors responsibility with annual accounts of companies. SEBI should follow international accounting standards. Corporate governance has to take care of social responsibility. A stable govt. with enough good will in world is also necessary for the good governance of corporate sectors.
By Paramita Bhattacharayya
www.legalserviceindia.com/
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