The system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community. Since corporate governance also provides the framework for attaining a company's objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.
the appointment of independent directors by minority shareholders, independent directors to receive compulsory training and pass examinations; and the adoption of a principle-based approach for certain principles.
Although it is clear that the proposals stem from the Anglo-Saxon corporate model, in some instances they go further and introduce new initiatives which recognise the need for certain obligatory requirements and the need for training in a market that has for centuries been based on a closed board structure and investor base. There has been a clear move in India to develop the corporate market to attract foreign investment. Foreign investment is slowly increasing shareholder diversity in some companies. This in turn pushes the agenda for the introduction of a regulated and universal corporate governance model. It appears from the recent SEBI proposals that the adoption of a corporate governance model based on the Anglo-Saxon model will be a useful starting point but the adoption of certain UK-based concepts such as 'comply or explain' should be adopted cautiously given the radical nature of certain proposals and significant effects they will have on the structure of Indian businesses. New regulatory institutions may need to be created, existing institutions strengthened and hybrid approaches adopted but, on the whole, the Anglo-Saxon model may well be a useful foundation.