Objectives
Indian corporate governance practices are determined by the combined influence of mandatory requirements, voluntary guidance, and market forces. A nation’s legal and market infrastructure influence the companies’ rate of disclosure which in turn increases profitability. Hence corporate governance needs to be monitored. Good legislation and a corrupt free market environment are necessary for corporate governance disclosure to be efficient.
It is the responsibility of the Board of Directors for assuring and giving a correct account through credible audits and disclosures. But today, nonfinancial disclosures like ownership frameworks, voting powers, managerial remuneration are also very important. Again, risk disclosures have a strong impact on related party transactions, insider trading, cyber threats, and unforeseen circumstances like the Covid 19 pandemic. The last factor motivated the Ministry of Corporate Affairs (MCA) and Securities Exchange Board of India (SEBI) to give organizations time bound exemption from different disclosures to facilitate business activities during difficult times. Under such circumstances, it is imperative to create a framework in India regarding disclosures norms which is commensurate to the risk involved for new risk factors.
The Indian Government is aiming for a USD5 trillion economy. Simultaneously, a lot of reforms are happening in various areas like Banking, NBFC, RERA, CSR, Stamp Duty, FII Investment, etc in order to finance large investments and infrastructure projects.
We therefore need qualitative improvements in the Governance of organizations, and must go beyond the current tick box compliance on SEBI LODR rules.