Assessing the Journey Towards Effective Corporate Governance - A Legislative Framework

Governance is an inevitable part of entire existence and aims at welfare, sustenance and prosperity of the governed subjects. Corporate governance can be considered as an environment of trust, ethics, moral values and confidence – as a synergic effort of all the constituents of society – that is the stakeholders, including government; the general public etc; professional, service providers – and the corporate sector. It offers a comprehensive and interdisciplinary approach to the management and control of companies. The initiatives taken by Government in 1991, aimed at economic liberalization and globalisation, led brought to the forefront the need for Indian companies to adopt corporate governance practices and standards, which are consistent with international principles. It led to the introduction of legislative reforms prescribing the manner in which Indian companies could implement effective corporate governance mechanisms. It will be worthwhile to have a glimpse of year wise initiatives for Corporate Governance in India and also Corporate Governance Code globally. It is the value-based management and ethics that the organization has to use in its governance. Business ethics and corporate governance of an organization go hand in hand. The soul and core of Corporate Governance is not the conduct or behaviour that we see outwardly. It is internalized values that an organization and its top management follow. The corporate governance, to be truly effective and enduring, has to be based on this higher part of our human nature or conscience. An important quality of this higher part of our conscience is self-governance. This higher self in us doesn‟t need the threat of external Law or the lure of an external reward to remain good or ethical; it has an intrinsic motivation for ethics and selfregulation. We are, individually and collectively, still far away from this ideal. We still need laws because we are not yet ready for self-governance. But we must keep this ideal as a polestar and gradually progress or evolve towards it through a combination of enlightened regulation of the external environment and inner transformation through education and inner discipline. The Institute of Company Secretaries of India (ICSI), a premier institute in India working wholeheartedly towards achieving the real objective of Corporate Governance, has framed draft International Corporate Governance Code (ICGC) for escalating the entire corporate world to its next level of compliance with the corporate governance in its true spirit.