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Sep 05, 2024
Corporate governance has become increasingly prominent in companies due to shareholder activism, regulatory initiatives, and rising market expectations. The absence of strong governance practices has been a key contributing factor in many corporate failures, making the focus on governance essential for sustainable success.
Sectoral regulators have been tightening the regulatory requirements for companies, which, although it adds to the time and financial costs of compliance, is crucial for safeguarding the interests of all stakeholders. Regulators now expect company boards to ensure the highest levels of governance. The role of independent directors, intended to bring transparency and impartiality to board decisions, remains a subject of debate, particularly regarding their actual independence. Boards need directors with diverse skills to enhance the quality of deliberations and decision-making. Equally important is fostering a board culture that encourages free and open discussions.
A positive trend in governance is the growing expectations of various stakeholders. Companies that excel in governance are rewarded with higher valuations by investors, stronger support from customers and vendors, and the ability to attract top talent. As a result, companies are increasingly viewing corporate governance as more than just compliance; they see it as integral to their long-term success.
The concept of stakeholder value creation has gained momentum recently. While it is undoubtedly the company's responsibility to care for its shareholders, this alone is not sufficient. Companies must also consider other key stakeholders: employees who dedicate their working lives, society that provides the environment for operations, customers who drive the business, vendors who maintain the supply chain, and governments that uphold law and order. Companies that embrace these broader responsibilities are the ones most respected for their governance practices.
Corporate governance is an evolving field, and much work remains to be done. Institutions like IOD and others must continue their efforts to help companies achieve the highest standards of governance.
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.
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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.
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