What is Corporate Governance?
Corporate Governance is a set of practices with the help of which the investors (largely the outside investor) protect themselves from management (insiders). Since the happening of Satyam fraud, the Corporate Governance has assumed a lot of importance in India. World over a number of such cases has emerged which bring the limelight to the issue of Corporate Governance e.g. Worldcom, Enron etc. Corporate Governance includes balancing the varied interest of different stakeholders like financiers, management, investors, customers, suppliers, community etc.
Objectives of the Good Corporate Governance:
Corporate Governance is one of the most important aspects of a company and it is very crucial for the existence and instilling investor confidence in the company. The prime motive of the Corporate Governance is to increase shareholders wealth and maximize the company's long term value. It recognizes the undeniable right of shareholders as the true owner of the company.
Corporate governance ensures that adequate disclosures are made to stakeholders especially investors of the company. It helps in ethically conducting the business of the company. It helps in attracting capital from inside and outside of the country who want to benefit from the growth of the company. It also promotes transparency, accountability and fairness in the conduct of business by the company. It helps in creating a board at the top that takes objective decision for the benefit of all stakeholders. It also provides an oversight and control of the management by the board.
Regulatory Framework for Corporate Governance:
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