IndexAbstractConcept of Corporate GovernanceHistorical Background in India on Corporate GovernanceReport of Iran CommitteeImportant Information on Corporate Governance in Capital MarketSEBI Consultative Document on Corporate GovernanceRegulatory Framework for Corporate Governance in IndiaProject of Companies Law, 2011 and its Impact on Corporate Governance in India Abstract Attention on corporate governance practices in the modern era has increased since 2001, particularly due to the number of high-profile financial scandals of large companies, most of them complicated by accounting frauds such as Satyam Computers, Enron Corporation etc. After numerous corporate financial scandals in the early part of the decade, pressure increased on investors for companies to strengthen corporate governance arrangements by decoding the roles of president and CEO. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essayThe broad gesture of laissez fair or isolationism, privatization, takeover, pension fund reforms, and the expansion of private savings are the reasons why corporate governance has become so important today. Investors from developed countries are challenging Indian companies to pursue international best practices with an emphasis on corporate governance. A McKinsey survey conducted in 2002 found that investors were willing to pay a premium for a well-governed company (Barton et al. 2006). Among all other forces, four major energetic forces can be recognized that have led to the materialization of corporate governance in India. These include globalization, privatization, unprincipled business practices and sanctuary scams. Corporate governance is disturbed by many stakeholders and the objectives for which the company was established. The company's valuable and ethical governance practice is to facilitate the nation to cultivate economically. The government of any country expects growth, employment, wealth and satisfaction through good governance. Furthermore, it should raise the living standard of society and increase the stickiness of society. Concept of corporate governance The prepositions of good governance are as old as good conduct, which needs no official definition. However, in the attribution to the corporate world, this has been expressed by various people, some of which are clarified below precisely to reconcile that the basic details and essence of the term are not removed. The Kumar Mangalam Birla Committee constituted by SEBI observed that “Strong corporate governance is critical to the recovery and activation of capital markets and is a significant safety mechanism for investors. It is the blood that fills the veins of a crystal clear corporate admission and high quality accounting rules. The fabric that acts in an applicable and achievable financial reporting structure”. of Directors, the Audit Committee, Directors' Remuneration, Board Procedures, Management, Shareholders, Corporate Governance Report and Compliance respectively, companies that do not comply with clause 49 may be removed from the list and charged with fines. NR Narayana Murthy Corporate Governance Committee constituted by SEBI described “corporate governance is management's endorsement of the inalienable rights of shareholders as true governance.of the company and of their role as fiduciaries towards shareholders. The law can only provide a minimum code of conduct for proper regulation of human being or society. The law is made not to stop any act but to ensure that if you do that act, you will have to face such residues, i.e. good for good and evil for evil. Therefore, in the same aspect, the role of law in corporate governance is that of an additive and not a substitute. It cannot be the only way to govern corporate governance but instead provides a minimum code of conduct for good corporate governance. The law provides a certain ethic to govern everyone so as to achieve maximum result and minimum abrasion. It plays a complete and correlative role. The role of law in corporate governance is in the Companies Act which guarantees certain restrictions on directors so that there is no adulteration of documents, there are no extremes of power, so as to impose the duty not to make secret profits and to compensate for losses due to breach of duty, negligence, etc., duty to act in the best interests of the company, etc. Historical Context in India Regarding Corporate Governance The concept of good governance is very old in India and dates back to the third century BC, where Chanakya (Kautliya) elaborated four aspects duties of a king viz. Raksha, Vriddhi, Palana and Yogakshema. Replacing the king of the state with the CEO or board of directors of the company, corporate governance principles refer to the protection of shareholder wealth (Raksha), the increase of wealth through the correct use of resources (Vriddhi), to maintaining wealth through profitable ventures (Palana) and above all by safeguarding the interests of shareholders (Yogakshema or safeguarding). Corporate governance was not on the agenda of Indian companies until the early 1990s and until then no one would find much attributed to this topic in the law book. In India, system infirmities, such as unconscionable stock market practices, boards of directors without accessible fiduciary responsibilities, poor disclosure practices, lack of transparency, and chronic capitalism, all required restoration and improvement in governance. The 1991 fiscal crisis and the subsequent need for The IMF approach convinced the government to adopt disciplinary activities for economic stabilization through liberalization. Strength also built up very slowly once the economy was opened up and the liberalization process started in the early 1990s. As part of the liberalization process, the government amended the Companies Act, 1956 in 1999. Further amendments followed subsequently in 2000, 2002 and 2003. Various methods were adopted, including strengthening some shareholder rights (e.g. by correspondence on key issues), SEBI accreditation (e.g. to prosecute non-compliant companies, increased penalties for directors who fail to fulfill their responsibilities, limits on the number of directorships, changes in reporting and the requirement that a " nominated small shareholder" be selected on the board of directors of companies with a paid-up capital of Rs under the patronage of the Bhaba Committee established in 1950 with the objective of supplementing the existing corporate laws and bringing a new basis for the corporate movement in independent India With the coming into force of this legislation in 1956, the Companies Act 1913 was repealed. After an involuntary start in 1980, India began its economic upliftment in the 1990s and the need for a comprehensive revision of the Companies Act, 1956 was felt.took ineffective initiatives in 1993 and 1997 to replace the current law with a new law. The essence of the incorporation of this law has been explored time after time as the corporate sector has advanced in step with the Indian economy and as many as 24 amendments have taken place since 1956. Major amendments to the law were made through the Companies (Amendment) Act, 1998 after considering the recommendations of the Sachar Committee, followed by further amendments in 1999, 2000, 2002 and finally in 2003 through the Companies (Amendments) Bill, 2003 thereafter to the report of RD Joshi Committee. In the current national and international context the importance of explaining corporate laws has long been felt by the government and the corporate sector so as to make clear clarification or apprehension welcome and provide a framework that accelerates economic growth. The government has therefore assumed a new ambition in this regard and set up a committee in December 2004 under the chairmanship of Dr JJ Irani to guide the Government in advanced revisions of the Companies Act 1956. The committee's recommendations presented in May 2005 mainly concern board management and governance, related party transactions, minority interests, investor education and protection, access to capital, accounts and auditing, mergers and consolidations , crimes and sanctions, reconstitution or re-establishment and liquidation, etc. The importance of corporate governance in the capital market Good corporate governance standards are essential for the integrity of companies, financial institutions and markets and impact the growth and stability of the economy. Over the past decade, India has made great strides in the areas of corporate governance reforms, which have improved public confidence in the market. These reforms have been well received by investors, including foreign institutional investors (FIIs). Compelling evidence of improving standards comes from the growing interest of FIIs in the Indian market; FII gross portfolio investment increased from $2.7 billion in fiscal 1996 to $166.2 billion in fiscal 2013. Governance reforms and the globalization of capital markets have reinforced each other. While continuous governance reforms have led to an increase in foreign investment, the globalization of capital markets has given impetus to corporate governance practices in the following way. An important side effect of the internationalization of Indian capital markets has been the push towards a more rigorous corporate governance regime. from the Indian industry itself. To market their securities to foreign investors, Indian companies making public offerings in India were persuaded to comply with corporate governance rules with which investors in the developed world were familiar. Furthermore, Indian companies listed abroad to raise capital were subject to stringent corporate governance requirements applicable to listing on such stock exchanges. They also adhered to the corporate governance rules and practices applicable to the markets on which they listed their securities. It must however be recognized that such practices have remained largely limited to only a few large companies and have not spread to the majority of Indian companies. SEBI Consultative Paper on Corporate Governance In early 2012, SEBI released a consultative paper on “Review of Corporate Governance Standards in India”. To improve corporate governance standards in India, the report provided a broad framework in the form of general corporate governance principles and proposals.The aim of the concept paper was to attract a broader discussion on governance requirements for listed companies in order to adopt global best practices. An attempt was made to ensure that the additional cost of complying with the proposals did not outweigh the benefits of listing. , while at the same time the need to increase investor confidence in the capital market was recognized. Regulatory Framework for Corporate Governance in India As part of the action or progress of economic liberalization in India and the procedure towards further evolution or expansion of the Indian capital markets, the Central Government's well-established regulatory control over the stock markets through the planning of SEBI. Originally well structured as an advisory body in 1988, SEBI was granted the authority to regulate the securities market under the Securities and Exchange Board of India Act, 1992 (SEBI Act). Public listed companies in India are governed by a multiple regulatory structure. The Companies Act is overseen by the Ministry of Corporate Affairs (MCA) and is currently enforced by the Company Law Board (CLB). That is, the MCA, SEBI and the stock exchanges share jurisdiction over listed companies, with the MCA being the primary government body charged with overseeing the Companies Act, 1956, while SEBI has acted as the regulator of the securities market since 1992. SEBI acts as an autonomous market-oriented body to regulate the securities market in the same way as the role of the Securities and Exchange Commission (SEC) in the United States. The agency's stated ambition is to protect the interests of securities investors and to support the development and direction of the securities market. The scope of SEBI's statutory authority has also been the subject of much debate and some authors have raised questions as to whether SEBI can make regulations in relation to matters falling within the jurisdiction of the Department of Corporate Affairs. SEBI's authority to discharge its regulatory responsibilities has not always been brilliant and when Indian financial markets committed colossal stock price frauds in the early 1990s it was found that SEBI had no statutory powers sufficient to conduct a full fraud investigation. Accordingly, the SEBI Act has been amended to provide it with sufficient inspection, investigation and enforcement powers, in line with the powers granted to the SEC in the United States. Distinguishing that a problem arising from overlap of jurisdictions between SEBI and MCA exists, the Standing Committee, in its final report, approved that while providing for minimum benchmarks, the Companies Bill should allow sectoral regulators such as the SEBI to exercise their designated jurisdiction through a more detailed regulatory dynasty, which will be decided by them as per the circumstances. Ascribing a similar case of jurisdictional overlap between the RBI and the MCA, the Committee recommended that it is necessary to accordingly enunciate in the Bill that the Companies Act will prevail only if the special law is silent in any way. Further, the Committee recommended that if both remain silent, essential provisions can be inserted in the Special Law itself and thus the status quo in this regard can be maintained and the same can be nicely clarified in the Bill. This, according to the Committee, would ensure that there is no jurisdictional overlap or conflict in the government statute or rules made thereunder.Companies Bill, 2011 and its impact on corporate governance in IndiaThe foundation of the umbrella review in the Companies Act, 1956 has been laid in 2004, when the government formed.