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July 5, 2015 Comments (0) Views: 1923 I-Director's Corner

Corporate Governance

The idea of mandating Independent Directors onto company boards is to institutionalise corporate governance.
What does corporate governance do ?
– It builds the Trust of all stakeholders, not only shareholders but employees, suppliers, partners as well as civil society.
– The other purpose is to ensure a Return – not limited to profits alone but returning to society while ensuring environmental stewardship
– Corporate governance also helps to mitigate risk in deployment of capital-financial capital as well as human and social capital.
– Corporate Governance puts in place mechanisms that help direction the company towards growth & prosperity in a long term sustainable manner.
The four pillars of corporate governance are:
Accountability – making managements accountable to boards which in turn are accountable to the shareholder
Fairness – ensuring an equitable and consistent treatment of shareholders, employees, partners, which is policy based
Transparency – publishing accounts & information, signing off on compliances, disclosures and certifications
Independence – True independence would imply a regime of “No Influences” except the purpose at hand!
The companies Act of 2013 mandates very stringent mechanisms of corporate governance though I must add that it seems to have gone to the other extreme!!
I will write more thoughts around this later…

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