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The article deals with the corporate governance and throws light on Clause 49, the structure of corporate governance in India.
Although numerous specialists have described corporate governance in numerous ways, its broader concept relates to the relationship among various participants in an organization, namely— corporate managers, directors, shareholders, employees, customers, suppliers and creditors. It aims at maximizing shareholders' value legally, ethically and on a sustainable basis, while ensuring fairness to company's customers, employees, investors, vendor-partners, the government and the community who can be broadly called the `stakeholders'.
In the post-Christ period, the Portuguese and Dutch gave rise to various global trading entities. The entities were reported to the kings. This was the beginning of the concept of corporate governance. However, the idea of corporate governance can be traced back to the ancient Indian history. Emperor Ashoka preached the concept of "Bahujana sukhayo" and "Bahujana hitayo" where `Bahujana' implies common people and the words `hitayo' and `sukhayo' imply well-being of masses. In the corporate atmosphere, corporate governance relates to the concept of well-being of stakeholders in a company. Kautilya, the great Economist and Finance Minister in the court of Chandragupta Maurya, had written extensively on relations among the king, courtiers and common men in the kingdom and methods for smooth running of the empire, in his book Arthasashtra which closely resembles the concept of corporate governance.
In the recent past, the concept of corporate governance gained prominence after number of financial failures, frauds and questionable business practices in the US. These failures prompted the regulatory authorities to take up the issue of corporate governance in a serious manner and suggest methods of developing good governance for in corporate success and sustainable economic growth. |
