A Leap Forward in Indian Corporate Governance
“Corporate Governance” this has become the most common word these days in the business world. After the Satyam misappropriation case CG is being taken even more seriously than ever before. Investors are demanding even more clarity and greater transparency in company affairs. A lot on corporate governance is talked in India but not much has been taken care off. Much of the reason lies with the Indian investors not being as demanding as they should be. The best evaluator to any company is the market, it values the firm in long term, it punishes the management for every bad decisions taken and also rewards when they do things right.
SEBI has issued many directives and mandates to enforce corporate governance but the structural weakness lies in the investor education and financial awareness level in individual investors who don’t understand the power of their voting rights giving incumbent managers take adva
ntage of them.
With the rise in institutional investors companies are forced to become more ethical, transparent, and are minimizing the principle-agency issues (difference in stakeholders view and management’s). Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.
Slowly but staidly India is evolving in strengthening its CG. CDSL Ventures (CVL), a wholly-owned subsidiary of Central Depository Services (India), on Tuesday (17th Nov 09) launched the e-voting system for listed companies. “This move will revolutionize the whole system,” Corporate Affairs minister Salman Khurshid said at the inaugural function. Though, this is not the first of its kind initiative, similar piece of technology is already being practiced in some of the developed markets such as US, China, Japan and North Korea. But it will surely guarantee a wider participation by shareholders on important company decisions requiring shareholders consent and will reduce the distance barriers which is the major cause of many shareholders being absent at AGM (Annual General Meeting) for voting.
SEBI has issued many directives and mandates to enforce corporate governance but the structural weakness lies in the investor education and financial awareness level in individual investors who don’t understand the power of their voting rights giving incumbent managers take adva
ntage of them.
With the rise in institutional investors companies are forced to become more ethical, transparent, and are minimizing the principle-agency issues (difference in stakeholders view and management’s). Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.
Slowly but staidly India is evolving in strengthening its CG. CDSL Ventures (CVL), a wholly-owned subsidiary of Central Depository Services (India), on Tuesday (17th Nov 09) launched the e-voting system for listed companies. “This move will revolutionize the whole system,” Corporate Affairs minister Salman Khurshid said at the inaugural function. Though, this is not the first of its kind initiative, similar piece of technology is already being practiced in some of the developed markets such as US, China, Japan and North Korea. But it will surely guarantee a wider participation by shareholders on important company decisions requiring shareholders consent and will reduce the distance barriers which is the major cause of many shareholders being absent at AGM (Annual General Meeting) for voting.
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