Directors Databank
Become a faculty
Blog
Become an Awards Assessor
Publications
Contact Us
Quick Links
Connect us
Sep 05, 2024
Corporate governance in India gained significant attention in the early 1990s, coinciding with the onset of economic liberalization. As companies in both the private and public sectors began raising funds through equity, the increasing ownership by shareholders and the heightened awareness among these new stakeholders created a strong demand for high standards of corporate governance, rooted in the principles of accountability and transparency. As a result, corporate governance standards became not just a regulatory requirement but a critical element in maintaining investor confidence and ensuring the sustainable growth of companies.
In response, the Ministry of Corporate Affairs, SEBI, and other regulatory bodies established a structured framework to enforce corporate governance standards. However, despite this seemingly robust regulatory system, numerous companies have still collapsed due to governance failures, revealing the underlying weaknesses in their governance structures. These instances highlight the inadequacy of relying solely on compliance-based models and imposed regulations. For corporate governance to be truly effective, it must be rooted in a strong moral code, rather than just adherence to regulatory requirements.
Overregulation, however, can pose a substantial obstacle to business growth. If regulatory norms are not carefully designed, they can restrict the flexibility companies require to adapt to changing market conditions. This responsibility primarily falls on the Board of Directors and Key Management Personnel. Therefore, it is crucial that regulatory norms are framed judiciously, striking a balance between ensuring robust governance and allowing companies the operational flexibility they need to thrive.
In today’s rapidly evolving business landscape, the importance of strong corporate governance cannot be overstated. This is particularly true for new-age tech companies, which often operate in highly dynamic and disruptive markets. Recent examples of tech companies that have collapsed due to governance failures and unchecked ambition serve as stark reminders of the critical need for sound governance structures. As these companies grow quickly, the risks linked to inadequate governance increase, making it crucial for them to establish and maintain high standards of ethical conduct from the beginning. The focus must shift from a purely compliance-based approach to one that is rooted in ethical principles and aligned with long-term strategic goals. As the business landscape evolves, so too must our approach to corporate governance, ensuring that it remains effective, adaptive, and grounded in ethical principles.
Bringing a Silent Revolution through the Boardroom
Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'. Currently it is associated with over 30,000 senior executives from Govt, PSU and Private organizations of India and abroad.
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
About Publisher
Bringing a Silent Revolution through the Boardroom
Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'. Currently it is associated with over 30,000 senior executives from Govt, PSU and Private organizations of India and abroad.
View All BlogsMasterclass for Directors
Categories
