Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices

CHAPTER 57

INDIAN CORPORATE GOVERNANCE: COMPLIANCE VERSUS VALUE ADDITION

Sanjay Anand

C. V. Baxi

C. L. Bansal

57.1 BACKGROUND

57.2 COMPANIES ACT OF 1956

57.3 MINISTRY OF COMPANY AFFAIRS

57.4 SECURITIES AND CONTRACTS (REGULATION) ACT OF 1956

57.5 SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) ACT OF 1992

57.6 DEPOSITORIES ACT OF 1996

57.7 ACCOUNTING STANDARDS

57.8 LISTING AGREEMENT OF THE SEBI 2000

57.9 GENESIS OF CLAUSE 49

57.10 MANDATORY REQUIREMENTS

(a) Clause 49(I)(A): Board Composition

(b) Clause 49(I)(B): Compensation of Nonexecutive Directors and Disclosures

(c) Clause 49(I)(C): Board Committees

(d) Board Meetings

(e) Clause 49(I)(D): Code of Conduct

(f) Clause 49(II): Audit Committee

(g) Disclosures

(h) Clause 49(V): Certification by CEO/CFO

(i) Clause 49(VI)

(i) Report on Corporate Governance

(ii) Evaluation

REFERENCES

57.1 BACKGROUND

The context factors characterizing the Indian practice of corporate governance are, among others: evolving public policy on control and regulation of Indian industry; the setting up of regulatory authorities for the banking, insurance, and financial markets; establishment of Competition Commission of India (which seeks to subsume the earlier Monopolies and Restrictive Trade Practices (MRTP) and the Board of Industrial and Financial Reconstructions (BIFR) acts); specific amendments to the Companies Act 1956 introduced in 2003; the lack of shareholder activism; significant number of closely held companies; the relative lack of single minority ...