Governance Matters for India Inc

Given the current somewhat depressed sentiment that has engulfed the global economy, it would not be surprising to see a marked increase in governance requirements. Within India’s own corporate governance environment, we have identified weaknesses that would benefit from more stringent requirements, guidance or both. While best practices in areas such as whistle blowing and risk management seem to be increasingly getting more recognition, those in areas like nomination committees and selection of board members (independent or otherwise) have not yet taken a firm hold.

 An analysis of the issues that companies currently face through a systematic and comprehensive enterprise wide risk management initiative can facilitate an effective polarisation of risks in their relative order of importance to the business. A well designed risk management system not only facilitates an assessment of threats, vulnerabilities and the consequent risks but also paves the path for an effective communication between the board and senior management. In our current volatile business environment, expectations for companies to have a strong set of corporate governance principles are higher than ever. With this in mind, our review helps in ascertaining how well Indian companies have, quantitatively and qualitatively, and in spirit and in form, adopted not just the relevant legislations and guidelines in India, but have also embraced other good governance practices that have been institutionalised across the globe.