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Sep 05, 2024
One of the critical enablers for the realization of India’s aspiration to become an economic superpower by 2047 is “good corporate governance." If Indian companies are run by the mantra of ethics, efficiency, and empathy, they can create value for investors, customers, society, and the environment. It has been the endeavour of IOD to support this mission by enabling the creation of competent boards through advocacy, capacity building, awards, and publications.
Corporate governance means the formal systems, rules, and procedures by which a company's business is transacted and its processes governed. Robust formal systems are the key to good governance. However, equally important are the informal factors, such as ethical standards, mutual trust, interpersonal relationships, and transparency among the board members, key management personnel within the company, and its institutional structure. These set of informal factors can be collectively denoted by the word ‘ethos’ of the company. It is only when both the formal and informal systems within the company are properly aligned with the company’s goals that good corporate governance is achieved. IOD, through its activities, promotes these values of corporate governance.
Apart from the factors that are internal to the company, there are outside factors that also matter in promoting good corporate governance. In fact, there are six internal and external pillars of good corporate governance: the board, management, shareholders (all internal to the company), auditors, rating agencies, and regulators (all external to the company), each of whom plays a crucial role. Together, they create conditions of incentive and disincentive that pave the way for good corporate governance. IOD has been providing platforms for fruitful interaction among all these pillars of good corporate governance.
Much focus has been on the composition of boards. Boards provide collective leadership to companies, helping them embark on the right strategic path and make the right decisions through the challenges posed by the business environment marked by volatility, uncertainty, complexity, and ambiguity. Having men and women of character, competence, talent, and experience on the boards is essential for good corporate governance. Capacity building of board members through conclaves and training programs and keeping them updated with the latest regulations, technologies, and practices is an important activity that IOD facilitates through its head office and regional offices across the country.
Regulators like the RBI, SEBI, NFRA, and others sector-specific regulators bring much-needed discipline to corporate activities by setting standards and benchmarks that need to be complied with. These stipulations by the regulators enable the board members to focus on the crucial areas that are necessary for corporate governance. Equally important are the auditors, who have a major responsibility to make sound assessments and judgments on financial matters through their audit and review processes and guide the audit committee and the boards to make the right financial decisions. Rating agencies inform investors and bankers about the financial health of the company and act as a bridge between the company and investors. The goal of good corporate governance depends on each of these entities playing their roles with integrity and competence.
IOD is working as a think tank that works to promote good corporate governance. Its conclaves promote dialogue between all these stakeholders in good corporate governance. Master classes build the capacity of prospective board members. The Golden Peacock Awards recognize the efforts of companies to achieve higher standards. Memberships and publications of books and journals complement the aforesaid activities. All this is dedicated to this singular mission of achieving good corporate 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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