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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 Volume 3, No. 5, May 2014

i-Explore International Research Journal Consortium www.irjcjournals.org

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Corporate Governance: Conceptualization in Indian Context

Neha Sharma, Assistant professor, BR Ambedkar College, Delhi University Surya Prakash Rathi, M.B.A. (GGSIPU) and CFA-MFA (ICFAI)

ABSTRACT The paper deals with the concept of corporate governance, which is very deeply related to the health index of an economy.The subject of corporate governance came to global limelight after collapses of high profile companies like the U.S. energy giant Enron, telecom heavyweight WorldCom, Parmalat and multinational newspaper group Hollinger Inc. The Satyam Scam in 2009 and Reebok scam in 2012 shattered the myth of good corporate governance India. The Sarbanes-Oxley legislation in the USA, the Cadbury Committee recommendations for European companies and the Organisation for Economic Co-operation and Development (“OECD”) principles of corporate governance are some of the corporate governance norms and standards. Corporate governance is defined as the set of processes, laws and institutions which affect the running and management of a company. Corporate governance ensures accountability in an organization and emphasizes on shareholders' welfare. The primary stakeholders of corporate governance are the shareholders, management and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators and the community at large. Factors influencing corporate governance are ownership structure, structure of company boards, financial structure and institutional environment. In India, there are six mechanisms to ensure corporate governance i.e. Companies Act of 2013, SEBI act, discipline of the capital market, nominees on company board, statutory audits and codes of conduct. The new Companies act 2013 and SEBI’s proactive actions paint a positive future for corporate governance in India.

INTRODUCTION The subject of corporate governance came to global limelight after collapses of high profile companies like the U.S. energy giant Enron, which concealed large losses and the telecom heavyweight WorldCom, which used fraudulent accounting methods in 2001. The problem was widespread with companies like Parmalat in Italy, which concealed large debts failed and multinational newspaper group Hollinger Inc., being shocked with revelations about

problems in their corporate governance in 2003. Question marks appeared over corporate governance practices around the world. On 7th January, 2009 B. Ramalinga Raju, the founder of Satyam confessed to falsifying the accounts of his company. This shattered the myth of good corporate governance in Satyam. Satyam had always fulfilled all the legal compliances; it had a respected board and an international auditor. With such hallmarks of good corporate governance unable to stop corporate governance failure at Satyam, it greatly undermined the credibility of the Indian corporate sector. This brought corporate governance and its related guidelines in India under the scanner. In 2012, India was rocked by its biggest corporate governance scandal after Satyam. Reebok India initiated action against its former Managing Director Subhinder Singh Prem and former Chief Operating Officer Vishnu Bhagat over a fraud of Rs 8,700 crore. The company claimed that the duo stole products by setting up secret warehouses, fraudulent accounting practices and making fictitious sales to cause a huge loss to the company. There are arguments over the question that out of the Anglo-Saxon market- model of corporate governance and the bank-based models of Germany and Japan which is better. There are huge difference between corporate governance laws and practices in the developed countries and in the developing world. The issue of corporate governance is of pivotal important for developing countries since it is integral to financial and economic development. India has one of the best corporate governance laws but poor implementation. The socialistic policies of the pre-reform era have also affected corporate governance in India. Corporate governance and economic development are intrinsically linked. Effective corporate governance systems encourage the development of strong financial systems. This leads to strong economic growth. Good corporate governance practices also lower the cost of capital by reducing risk. The Sarbanes-Oxley legislation in the USA, the Cadbury Committee recommendations for European companies and



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the Organisation for Economic Co-operation and Development (“OECD”) principles of corporate governance are some of the corporate governance norms and standards. OBJECTIVES OF THE STUDY

1. To conceptualize corporate governance in Indian context

2. To understand the factors influencing corporate governance in the India

RESEARCH METHODOLOGY In order to answer the research objectives factors were found that influence corporate governance based on secondary data acquired from the conduct of different studies, newspaper reports and various government and industry mandated committees’ reports on corporate governance. A complete theoretical framework has been developed to understand the concept of corporate governance and its evolution in India. The various mechanisms of corporate governance India have been reviewed. The literature review includes the study of evolution of corporate governance in India. It also details the various mechanisms for corporate governance in India. It then studies the effects of board of directors, ownership model, legal environment and economic environment on corporate governance. It details the different models of corporate governance in various countries. DATA COLLECTION The data used in the study is secondary data. The secondary data used is acquired from the conduct of different studies, various newspaper reports and various government and industry mandated committees’ reports on corporate governance. DEFINITION OF TERMS “Corporate governance is about how suppliers of capital get managers to return profits, make sure managers do not misuse the capital by investing in bad projects, and how shareholders and creditors monitor managers.” (American Management Association) “Corporate governance is the relationship between corporate managers, directors and providers of equity, people and institutions who save and invest their capital to earn a return. It ensures that the board of directors is accountable for the pursuit of corporate objectives and the

corporation itself conforms to the rules and regulations.” (International Chamber of Commerce) Shleifer and Vishy (1997) define corporate governance as the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. Gillan and Starks (1998) define corporate governance as the system of laws, rules and factors that control operations at a company. “Corporate governance is the system by which companies are directed and controlled.” (The Cadbury Committee on Financial Aspects of Corporate Governance, 1992) “Corporate governance involves a commitment of a company to run its businesses ina legal, ethical and transparent manner – a dedication that must come from the very top and permeate throughout the organization.” (Report of the CII Task Force on Corporate Governance, 2009) REVIEW OF LITERATURE Chakrabarti, (2005) discusses the evolution of Corporate Governance in India. He states that this issue is central to the subjects of finance and economics. Major corporate governance failures in developed countries have garnered much media attention. Good corporate governance is directly related to economic development, so it becomes very important for developing countries. He discusses how socialist era policies have affected corporate governance in India. He discusses what ails the Indian corporate sector and the major efforts made since liberalisation to improve the system. One major step in this direction has been, SEBI instituted the Clause 49 of the Listing Agreements dealing with corporate governance. Indian banks are also moving towards more market-based governance. Varma, (1997) states that the corporate governance problems in India are very different from that in USA or UK. In those countries, the problem is related to making the management accountable to the owners. The problem in the India is of managing good corporate conduct by the dominant shareholder and protecting the minority shareholders. It discusses the role of the regulator and the capital market, which can lead to good corporate conduct by the dominant shareholder and protect the interest of the minority shareholder. Regulators face a problem that in correcting corporate governance issues they could be involved in micro-management of business decisions beyond their mandate. The capital market does not have the enforcing power but can make business judgements. It disciplines the dominant shareholder by denying him access to the capital market. The paper discusses the trends of deregulation, institutionalization, globalization



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and tax reforms which make the minority shareholder powerful. The author argues that a more efficient and vibrant capital market can lead to better corporate governance in India. Yadav & Baxi, (2009) discuss the corporate governance failure at Satyam. They argue that the failure of independent directors and failure to implement good corporate governance measures led to the failure of the company. Goswami, (2002) discusses corporate governance in India. He says at time of independence, India had a factory sector accounting for a tenth of the national product, four functioning stock markets and a well regulated banking system. The 1956 Companies Act built on this base. The early corporate sector in India was characterized by the managing agency system. The 1951 Industries Development and Regulation Actand the 1956 Industrial Policy Resolution, put in place a system of licensing and red-tape that led to slow economic growth and corruption and marked the move towards socialism. In the following decades Indian Corporate sector grew more inefficient and corrupt. Exorbitant tax rates promoted accounting practices which could help in tax evasion. Since the capital market was unable to raise equity capital efficiently, the buck was passed to central government development finance institutions and other state-government owned development finance institutions to provide long-term credit to companies. These institutions along with and the central government mutual fund, the Unit Trust of India had nominee directors on board of companies to which they had lent. But these directors played very inactive roles. It discusses the development of corporate governance in India after liberalization. Y.V. Reddy, (2002) summarizes the reforms-era policies for corporate governance in Indian banks. Sarkar and Sarkar, (2005) found that corporate boards of large companies in Unites States were bigger in comparison to India in 2003. It also showed that Indian boards had fewer independent directors and 41% of Indian companies had a promoter on the board. It states that there is evidence that larger boards lead to poorer performance both in India and in the United States. Sarkar and Sarkar, (2005) find that company value actually declines with a rise in the holding of mutual funds and insurance companies between zero and a 25% holding, after which there is no clear effect. On the other hand, for DFIs’ holdings, there is no clear effect on valuation below 25%, but a significant positive effect above 25%, suggesting better monitoring takes place when the stakes are higher.

THEORETICAL FRAMEWORK Corporate governance is defined as the set of processes, laws and institutions which affect the running and management of a company. Corporate governance ensures accountability in an organization and emphasizes on shareholders' welfare. The primary stakeholders of corporate governance are the shareholders, management and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators and the community at large. Factors influencing corporate governance: 1. The ownership structure The structure of ownership of a company guides to a major degree the way it is managed and run. In the USA and UK, it is distributed between individuals and institutional shareholders and in Germany and Japan it is in the hands of a few large shareholders. In India corporate sector is characterized by the co-existence of government owned, private and multinational companies. 2. The structure of company boards The structure of company board influence the way the companies are managed and controlled as they establish the strategic objectives of the company, the policies governing it and deciding the top management. 3. The financial structure The financial structure of the company, that is the way debt and equity is divided, has implications for the quality of governance. 4. The institutional environment The legal, regulatory, and political environments have implications on the way a company operates. Political decisions create the legal and economic mechanisms to control corporate governance Mechanisms of corporate governance: In India, there are six mechanisms to ensure corporate governance. 1. Companies Act Companies in our country are regulated by the new Companies Act, 2013, which has replaced the Companies Act 1956.The Companies Bill, 2012 has also been passed. 2. Securities Law The primary securities law in our country is the SEBI Act. Securities and Exchange Board of India (“SEBI”) was set up in 1992. For investor protection, it has mandated information disclosure both in prospectus and in annual accounts. For listed Indian companies, SEBI has prescribed a Code of corporate governance provided in the Clause 49 of the listing agreement with stock exchanges. 3. Discipline of the capital market Capital market has major impact on corporate governance. The minority shareholders can play an effective role here. They can depress the share process of a company by refusing to subscribe to the capital of a company in the



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primary market and selling their shares in the secondary market. 4. Nominees on company boards Financial institutions have large shareholdings and debt holdings in companies. They have nominees on the boards of companies who can play an effective role by blocking any move which is detrimental to the interest of the company. 5. Statutory Audit Statutory audit ensures good corporate governance. Auditors are the most effective tool of accountability for the shareholders, lenders and others who have financial stakes in companies. 6. Codes of conduct In spite of all regulatory mechanisms which also have penal provisions corporate governance failures still happen. What is needed is self-regulation on the part of directors in form of voluntary corporate code of conducts. Background to Corporate Governance in India The 1956 Companies Act built on the pre-independence era base of clearly defined stock-market and trading rules, well developed equity and banking culture. The 1951 Industries (Development and Regulation) Act and the 1956 Industrial Policy Resolution led to license raj and slow economic growth. Corporate bankruptcy is dealt by the 1985 Sick Industrial Companies Act (SICA). A company is considered “sick” only after its entire net worth has been eroded, and it is referred to the Board for Industrial and Financial Reconstruction (BIFR). There have been irregularities in share transfers and registrations. Company Boards have been questioned on their independence and effectiveness in their role as a watch-dog to deter ineffective and corrupt corporate practices. In 1991, Indian economy started liberalizing. In 1992, SEBI was established and it signaled the opening of a new chapter in corporate governance and investor protection in India. SEBI primarily regulates and monitors stock trading. It has contributed meaningfully in creating the ground rules of corporate conduct in the country. One of the first such initiatives to promote good corporate governance in India was the Confederation of Indian Industry Code for Desirable Corporate Governance, developed by a committee chaired by Rahul Bajaj. This committee was formed in 1996 and submitted its code in April 1998. SEBI constituted two committees to look into the issue of corporate governance. The first committee headed by Kumar Mangalam Birla submitted its report in early 2000, and the second and chaired by Narayana Murthy, three years later. These two committees brought great changes

in corporate governance in India through the formulation of Clause 49 of Listing Agreements. The 2002, Naresh Chandra Committee on Corporate Audit and Governance and in 2004 the Expert Committee on Corporate Law (J.J. Irani Committee)focused on suggesting reforms for the Companies Act of 1956 that still formed the backbone of corporate law in India before the Companies Act, 2013 was introduced. The SEBI enacted the Clause 49 of the Listings Agreements using the recommendations of the Birla Committee. Clause 49 is a milestone in the evolution of corporate governance in India. It is similar to the Sarbanes-Oxley measures in the United States The major areas of corporate governance covered by important features of Clause 49 regulation are:

1. Composition of the board of directors 2. The composition and functioning of the audit

committee 3. Governance and disclosures regarding subsidiary

companies 4. Disclosures by the company 5. CEO/CFO certification of financial results 6. Reporting on corporate governance as part of the

annual report 7. Certification of compliance of a company with the

provisions of Clause 49 Clause 49 stipulates specific corporate disclosures in the following areas:

1. Related party transactions 2. Accounting treatment 3. Risk management procedures 4. Proceeds from various kinds of share issues 5. Remuneration of directors 6. A Management Discussion and Analysis section in

the annual report discussing general business conditions and outlook

7. Background and committee memberships of new directors as well as presentations to analysts

Companies Act 2013 The Act replaces the “National Advisory Committee on Accounting Standards” with “National Financial Reporting Authority” (NFRA). This will lay down accounting and auditing policies. This will monitor and enforce compliance with accounting and auditing standards. The Board of directors (BOD) report has been mandated to include information on details of meetings, attendance, remuneration of directors and Key Managerial Personnel (KMP), penalty or punishment imposed on the company or



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its officers. It would also include the statement on independence declaration given by independent directors. It would have the company’s policy on director’s appointment and remuneration, including the criteria for determining independence of a director, positive attributes of an independent director and remuneration policy for KMP and others. Companies will have to share financial reports, audit report and all documents prescribed by law with every member and every other entitled stakeholder, not less than 21 days before date of meeting. Company will have to have a website where all financial statements would be made available. Conditions have been laid as to tenure of auditors. Company cannot appoint or re-appoint its auditors for more than two terms of 5 consecutive years, if the auditor is an audit firm and more than one term of five consecutive years if the auditor is an individual. An auditor can provide services to the company only as approved by the board or the Audit Committee. Auditors have to report to central government any offence involving fraud being committed against the company by its officer or employee. Members or depositors or any class of them can claim damages or compensation or demand any other suitable action from or against the auditor/audit firm for any misleading or improper statement made in audit report or any unlawful or wrong act or conduct and can file class action suit against defaulting company, directors and officers to claim compensation. Any company with a net worth of 500 crore rupees or more; or turnover of 1000 crore rupees or more; or net profit of 5 crore rupees or more during every financial year will constitute a Corporate Social Responsibility (CSR) Committee. It will have three or more directors and at least one director will be independent. Board has to approve CSR policy and disclose the contents in the board report and place it on the company website. The Act has created the Serious Fraud Investigation Office (SFIO).The board needs to have at least one minimum director who has stayed in India for at least 182 days in the previous calendar year. It would also need to have one women director. Every listed company will have at least one third of total directors as independent directors.

Central government will prescribe the minimum number of independent directors in public companies. The Act states that independent directors should not have any material pecuniary relationship with the company, its promoters, directors and subsidiaries which can affect the independence of the director either in the current financial year or immediately preceding two years.

Every listed company and certain classes of public companies will constitute an Audit Committee. It would have a minimum of three directors, with Independent Directors forming a majority. The board will lay down the terms of working of Audit committee. The committee will recommend the terms of appointment and remuneration of auditors. It will monitor auditor’s independence and performance; effectiveness of the audit process and review the financial statement and auditor’s report. Every listed company and those prescribed by the Rules are required to constitute a Nomination and Remuneration Committee. It will consist of minimum three non-executive directors with Independent Directors forming a majority. It will formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board remuneration policy for directors, KMP and all other employees. .The policy of the committee will be disclosed in the board’s report. Listed companies or those that have more than one thousand shareholders, debenture-holders, deposit holders and any other security holders at any time during a financial year will have constitute a Stakeholders Relationship Committee. It will be chaired by a non-executive director. The board will decide other members of the committee. The committee will consider and resolve the grievances of security holders of the company. Such class or class of companies as maybe prescribed will appoint an internal auditor to conduct internal audit of the company. Such an auditor would have to be a chartered accountant or cost accountant, or such other professional as maybe decided by the board. Central government can prescribe manner and intervals in which internal audit shall be done and reported to the board. Indian Model of Corporate Governance It is an amalgamation of the Anglo-American legal framework enmeshed with and two broad categories of financial systems, i.e. the market based system of Unites States and Britain and the bank based system of Japan and Germany. The Anglo-Saxon system is market based where ultimate control is with financial market and there is distance between ownership and management. It has a powerful CEO. Shareholders do not have much accountability with the management and often use financial markets, where they sell their shares as their mode of holding the management accountable. This ensures that management does not lower shareholder interests. Banks have a nearly no role in management of the company. Companies function in a very different manner in the bank based systems in Germany and Japan where banks play a very major role. In Germany, share ownership is more

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concentrated and banks provide finance and observe routine business activities. The companies are run by Aufstichtsrat, big supervisory boards which are composed of nearly50% labour representation. The supervisory board appoints another board, Vorstand to manage the company which is accountable to it. The company is very closely associated with the bank that owns shares in the company and gives it board representation. The company takes the bank’s consent over all major steps. The Indian corporate governance system has the basic corporate legal structure of Anglo-Saxon model, but the share ownership is more concentrated and financial institutions play an important role in financing companies. Equity ownership and board representation allow these financial bodies to monitor the management. But their powers are limited to as compared to the bank based systems. Factors influencing corporate governance in the Indian Context 1. Role of Independent Directors Indian corporate structure gives great importance to the role of independent directors for enforcing good corporate governance. Clause 49 of Listing Agreements with stock exchanges stipulates that non-executive members should comprise at least half of a board of directors. It defines an “independent” director and requires that independent directors comprise at least half of a board of directors if the chairperson is an executive director and at least a third if the chairperson is a non-executive director. They serve as watchdog over management. The Companies Act 203 has mandated that every listed company will have at least one third of total directors as independent directors. Central government will prescribe the minimum number of independent directors in public companies. The Act states that independent directors should not have any material pecuniary relationship with the company, its promoters, directors and subsidiaries which can affect the independence of the director either in the current financial year or immediately preceding two years. 2. Directors Remuneration According to the SEBI Code on Corporate Governance, Board of directors decide the remuneration of Non-Executive Directors. A full disclosure has to be made regarding the elements of remuneration package, incentives, service contracts and Stock Options. The Companies Act 2013 mandates that every listed company and those prescribed by the Rules are required to constitute a Nomination and Remuneration Committee. It will consist of minimum three non-executive directors with Independent Directors forming a majority. It will formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board remuneration policy for directors, KMP and all other employees. The policy of the

committee will be disclosed in the board’s reportThis transparency helps in avoiding conflict of interest and remuneration affecting the effectiveness of non-executive director’s role. 3. Ownership model The structure of ownership of a company determines how it is run. The ownership structure can be dispersed among individual and institutional shareholders as in the US and UK or can be concentrated in the hands of a few large shareholders as in Germany and Japan. Indian corporate sector is characterized by the co-existence of government owned, private and multinational Enterprises. A publicly owned company can raise inexpensive capital if its existing shareholders assign it a high value. In this process they can overstate the company’s profits to keep the value of its bonds and equities at a higher value. 4. Competency of Board of directors The structure of company boards has considerable influence on the way the companies are managed and controlled. The board of directors is responsible for establishing strategy and its execution plan for the company. They have to question management’s strategy if it is going against the path of good corporate governance. 5. Role of Audit committee Audit committee improves the quality of financial reporting by reviewing the financial statements, creating a climate of discipline and reducing the opportunity for fraud. It provides a communication link with the external auditor and strengthens the Internal Audit Function.The companies Act 2013 mandates every listed company and certain classes of public companies will constitute an Audit Committee. It would have a minimum of three directors, with Independent Directors forming a majority. The board will lay down the terms of working of Audit committee. The committee will recommend the terms of appointment and remuneration of auditors. It will monitor auditor’s independence and performance; effectiveness of the audit process and review the financial statement and auditor’s report. It will vet inter corporate loans and investments. It will evaluate internal financial controls and risk management systems and monitor the end use of money collected via public offers. 6. Role of shareholders committee SEBI’s Code for Corporate Governance stipulates the constitution of shareholder’s committee under the chairmanship of a non-executive director to ensure that the grievances of shareholders are properly received and solved. Institutional investors can play an activist role in ensuring good corporate governance. They can act as communication channel for individual shareholders for taking up their concerns with the company's management.

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The Companies Act 2013 mandates that listed companies or those that have more than one thousand shareholders, debenture-holders, deposit holders and any other security holders at any time during a financial year will have constitute a Stakeholders Relationship Committee. It will be chaired by a non-executive director. The board will decide other members of the committee. The committee will consider and resolve the grievances of security holders of the company. 7. Role of rating agencies The rating agencies look into the company’s books to make assessments and investigate the financial condition of the company. They can lower the rating of a company if they find erroneous and noncompliant financial statements and warn investors. 8. Efficiency and trustworthiness of Audit The auditing firms should properly investigate and report to shareholders about any risk. 10. Transparency and full disclosure of information The company should make full and true disclosures in their mandatory disclosures to the stock market and annual reports. This increases share holder confidence. Under the Companies Act 2013, the Board of directors (BOD) report has been mandated to include information on details of meetings, attendance, remuneration of directors and Key Managerial Personnel (KMP), penalty or punishment imposed on the company or its officers. It would have the company’s policy on director’s appointment and remuneration, including the criteria for determining independence of a director, positive attributes of an independent director and remuneration policy for KMP and others. It would also list down the comments made by the board on every reservation or adverse remark or disclaimer made by the auditor and the company secretary in their reports. It will have the CSR policy. 11. Effective implementation of whistleblower policy Companies should adopt the non-mandatory whistleblower policy of Clause 49 of the Listing Agreement. CONCLUSION The spirit of corporate governance ensures fairness, transparency and accountability. Appointing a chief ethics officer and having a clear code of ethics will go a long way in enabling good corporate governance. Indian corporate system has evolved from a socialist era public sector dominated economy to a vibrant private sector driven one. The laws have evolved slowly. But the new Companies act 2013 and SEBI’s proactive actions paint a positive future for corporate governance in India. Indian corporate governance system is characterized by strong laws but poor implementation. Independent directors can play a very important role in this. The new Companies’

Act 2013 has laid down mandatory and clear provision in this regard and made this a very efficient mechanism of corporate governance. Timely and accurate flow of information to the equity shareholders is very important as they can play a pivotal role in ensuring good corporate governance. The new Act by broadening the horizon of board of director’s report and updating of financial records on the website of the company has ensured this. Enforcement of laws has also seen a positive movement with establishment of Serious Fraud Investigation Office, having statutory status. Auditors have also been provided with clear cut guidelines in the new Act. The control of fair practices by rating agencies and an effective whistle blower mechanism would further strengthen corporate governance in India. With the dynamic economic environment it becomes imperative for laws to keep changing and adapting. REFERENCES

[1] Bernard Black and Vikramaditya Khanna, 2007, “Can Corporate Governance Reforms IncreaseFirms’ Market Values?: Evidence From India,” Journal of Empirical Legal Studies.

[2] Chakrabarti, Rajesh, 2005, Corporate Governance in India – Evolution and Challenges, Sourced at SSRN: http://ssrn.com/abstract=649857 or http://dx.doi.org/10.2139/ssrn.649857.

[3] Charles P. Oman, 2006, Corporate Governance in Development: The Experiences of Brazil, Chile, India, and South Africa, OECD Development Centre and CIP.

[4] CII,2009, Report of the CII Task Force on Corporate Governance, Delhi: Author.

[5] Jayati Sarkar and Subrata Sarkar, 2000, Large shareholder activism in developing countries: Evidence from India, International Review of Finance, 1, pp. 161-94.

[6] Jayati Sarkar and Subrata Sarkar, 2005, “Multiple Board Appointments and Firm Performance in EmergingEconomies: Evidence from India,” Working Paper 2005-001, Indira Gandhi Institute of Development Research,Mumbai, India.

[7] Jayati Sarkar and Subrata Sarkar, 2005, “Corporate Governance, Enforcement and the Role of Non-ProfitOrganizations,” Background Paper for IFMR Conference on Corporate Governance, IFMR, Chennai, India.

[8] Omkar Goswami, 2002, “Corporate Governance in India,” Taking Action Against Corruption in Asia and the Pacific (Manila: Asian Development Bank), Chapter 9, Manila.

[9] Mahindra Satyam Computer Services Ltd, 2008-2009,Annual Report, Hyderabad: Author.

[10] National Association of Corporate Directors (NACD) – Directors Monthly, "Enlightened



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Boards: Action Beyond Obligation", Vol. 31Number 12 (2007), Pg 13.

[11] Nicolas Meisel, 2004,Governance Culture and Development , Paris: OECD Publishing.

[12] Rajesh Chakrabarti, 2006. The Financial Sector in India – Emerging Issues, Oxford University Press, New Delhi, India.

[13] Reddy, Y V, 2002.“Public Sector Banks and the Governance Challenge - The Indian Experience,” BIS Review 25/2002, Bank forInternational Settlements, Basle.

[14] Satyam Computer Services Ltd, 2006-2007,Annual Report, Hyderabad: Author.

[15] Satyam Computer Services Ltd, 2007-2008,Annual Report, Hyderabad: Author.

[16] Sharma J P, 2011, Corporate Governance, Business Ethics and CSR, Ane Books, Delhi, India.

[17] Tarun Khanna and Krishna Palepu, 2000, “Emerging Market Business Groups, Foreign Investors andCorporate Governance,” in Randall Morck, ed. Concentrated Ownership, NBER, University of Chicago Press.

[18] COMPANIES ACT, 2013 sourced at HTTP://WWW.MCA.GOV.IN/MINISTRY/PDF/

[19] COMPANIESACT2013.PDF

[20] Varma J V, 1997, Corporate Governance in India: Disciplining the Dominant Shareholder,IIMB Management Review, Bangalore

[21] Yadav, V & Baxi C V, 2010, Corporate Governance Failure at Satyam, The Asia Case Research Centre, The University of Hong Kong, China.

LIST OF ABBREVIATIONS

1. BIFR- Board for Industrial and Financial Restructuring

2. DFI- Designated Financial Institutions 3. OECD- Organizations for Economic Co-operation

and Development 4. PSEs- Public Sector Enterprises 5. SEBI- Securities Exchange Board of India 6. SFIO- Serious Fraud Investigation Office 7. SICA- Sick Industrial Companies Act 8. NFRA- National Financial Reporting Authority 9. KMP - Key Managerial Personnel 10. BOD- Board of directors 11. NCLT- National Company Law Tribunal 12. CSR- Corporate Social Responsibility

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