Topic: Corporate governance in India: challenges and the way forward
Instructions: Write an essay of 200 words on the above-mentioned topic. Use the following hints and your own knowledge to write the essay.
a. Definition of Corporate governance
b. Importance of corporate governance in India
Challenges in Corporate governance
a. Lack of transparency
b. Insider trading
c. Ineffective independent directors
d. Role of promoters
Measures to improve corporate governance
a. Effective independent directors
b. Disclosure requirements
c. Role of the board
d. Code of conduct
The way forward
a. Importance of corporate governance for investors
b. Role of SEBI in improving corporate governance
c. Need for effective enforcement
a. Recapitulation of the challenges and measures
b. Importance of Corporate governance for sustainable growth
Corporate governance is the system of rules and practices by which companies are directed and controlled. In India, corporate governance faces several challenges such as lack of transparency, insider trading, and ineffective independent directors. The appointment of ineffective independent directors and the dominant role of promoters also pose a challenge to corporate governance.
To improve corporate governance, companies must make adequate disclosures about their operations and financial performance. The board of directors should be independent, with a majority of independent directors, and responsible for establishing the company’s strategy and overseeing its implementation. Effective enforcement is also necessary to ensure that companies adhere to ethical practices.
The way forward is for companies to appoint effective independent directors and establish a strong code of conduct for directors and senior management. The Securities and Exchange Board of India (SEBI) has an essential role to play in improving corporate governance by implementing mandatory disclosure requirements. Effective enforcement is also necessary, and the government should establish an independent body to oversee corporate governance practices and ensure compliance.
Corporate governance is essential for sustainable growth, and there are several measures that can be taken to improve it in India. The appointment of effective independent directors, strong disclosure requirements, and a robust code of conduct are necessary to ensure ethical practices and protect the interests of stakeholders.