CORPORATE GOVERNANCE

AND BUSINESS ETHICS

ASSIGNMENT

ANUSHREE BHOWAL (COI18007)

AVINASH YADAV (COI18024)
 ACKNOWLEDGMENT

We are delighted to take this line, expressing our heartfelt appreciation to many people who
helped us to achieve this assignment in a large way. We have offered a lot of guidance and
assistance in the preparation of this Assignment. First, I would like to thank Dr. Rupjyoti
Saha, who has an invaluable experience in analysis issues and methods.

In expansion, We would like to thank our guardians for their shrewd advice and sympathetic
ear. You are continuously there for us. At long last, We may not have completed this
Assignment without the bolster of our friends and seniors, who given fortifying feedbacks as
well as cheerful diversions to rest my intellect exterior of my inquire about.
 CONTENT

INTRODUCTION ....................................................................................................................... 3
STANDARD OF CORPORATE GOVERNANCE IN INDIA ................................................... 4
CORPORATE GOVERNANCE STRUCTURE IN RIL ........................................................... 6
CONCLUSION ............................................................................................................................ 7
INTRODUCTION

Since the late 1990s, corporate governance reforms in India have seen substantial changes.
The Securities and Exchange Board of India (SEBI) implemented the first comprehensive
corporate governance reforms in 2000 through Clause 49 of stock exchange listing
agreements. Over the next decade, the Companies Act, 1956 was abolished and replaced by a
new set of legislation under the Companies Act, 2013, following extensive debate, voluntary
recommendations, and lessons learned from the Satyam debacle in 2009. Following the
passing of the 2013 Act, new rules were enacted, as well as distinct SEBI-administered
regulations for listed firms. The Companies Act, 2013 received the President of India's assent
on August 29, 2013, and was enacted on September 12, 2013, abolishing the old Companies
Act, 1956. The Companies Act of 2013 establishes a legal framework for corporate
governance by improving disclosures, reporting, and transparency through increased and new
compliance standards. Apart from that, the Monopolies and Restrictive Trade Practices Act of
1969 (replaced by the Competition Act of 2002), the Foreign Exchange Regulation Act of
1973 (replaced by the Foreign Exchange Management Act of 1999), the industries
(Development and Regulation) Act of 1951, and other statutes have an impact on corporate
governance principles. Non-regulatory agencies have released codes and rules on Corporate
Governance from time to time, in addition to different acts and recommendations issued by
various regulators.

In India, the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of
India form the organisational framework for corporate governance activities (SEBI). Through
Clause 49, SEBI oversees and supervises corporate governance of listed firms in India. This
clause is included in stock exchanges' listing agreements with corporations, and it is
mandatory for listed companies to follow its terms. MCA facilitates the exchange of
experiences and ideas among corporate leaders, policymakers, regulators, law enforcement
agencies, and non-governmental organisations through its various appointed committees and
forums, such as the National Foundation for Corporate Governance (NFCG), a not-for-profit
trust. It is a moment of great pride for the Indian corporate sector. Around 12 Indian
companies have been included to Forbes' list of the world 2,000 most admired companies.
STANDARD OF CORPORATE GOVERNANCE IN INDIA

Organisation for Economic Co-operation and Development (OECD) has been recognised as
an International Benchmark for Corporate Governance in many countries, where multilateral
organisations such as the World Bank and the Asian Development Bank have shown a keen
interest in the subject of corporate governance, the Organisation for Economic Co-operation
and Development (OECD) has taken the intellectual lead in developing a set of cogent
principles of corporate governance. As an inter-governmental organisation representing the
world's industrially developed nations, the OECD has produced a set of clearly defined
principles that it thinks will be valuable to all countries, regardless of their stages of
development, legal systems, institutional frameworks, and traditions. The OECD's primary
goal in developing these Principles is to help both its member countries and non-member
governments in making appropriate adjustments in their legal, institutional, and regulatory
frameworks to facilitate strong corporate governance regimes. The OECD believes that the
principles it has developed comprise fundamental aspects that should typically be included in
all excellent corporate governance regimes.

All well-governed corporate organisations should value excellent business ethics and be
mindful of the environmental and social concerns of the communities in which they operate.
While the principles include standards designed to protect the interests of shareholders, they
are also supposed to prioritise the interests of stakeholders like as employees, creditors,
suppliers, consumers, the environment, and so on. All stakeholders must work together
effectively to create wealth for shareholders and construct financially stable organisations.
The OECD Principles of Corporate Governance, published in late 1999, have become a
worldwide standard. These standards have grown in response to rising awareness of the need
of strong corporate governance and calls from OECD countries Ministers in 1998 for the
development of a set of standards and guidance. The Principles are the first significant
worldwide effort to develop basic aspects of strong corporate governance systems. The
OECD has stated unequivocally that the principles are not meant to provide a singular model
of effective company governance. Because various nations have distinct legal systems,
institutional structures, and traditions, it may be required to implement these standards in a
manner that is appropriate for each country. As a result, the OECD has declared these
principles non-binding on member nations.
However, at the national level, it is as crucial that the legal, regulatory, and institutional
framework be appropriately supportive. In the Indian context, this means that the Companies
Act, the Securities Contracts Regulation Act, and the rules enacted thereunder should make
good governance practises mandatory for the business sector. As we will see later, there are
several areas where the policy framework will need to be strengthened. Adoption of
international accounting standards to provide full transparency and consolidated accounts
would be beneficial in the accounting field. Corporate governance systems are increasingly
convergent toward a more unified corporate governance approach. Many common
components of the market-oriented governance systems of the United States and the United
Kingdom are likely to be included into such a governance model. Because of the rising
international integration of financial markets, particularly those in India, the process of
corporate governance convergence is gaining traction. As the influx of direct and portfolio
foreign investment grows, there will be more pressure to fulfil foreign investors' concerns and
expectations regarding corporate governance norms and procedures. Globalization of product
markets and deregulation of local financial markets are adding to the pressure on businesses
to implement strong governance procedures. Companies face little pressure to adopt more
efficient production systems or good governance practises as long as they operate primarily
in the domestic market, which frequently restricts competition through regulatory measures
and also protects them from foreign competition through trade and tariff barriers.

In India, the prevailing type of corporate governance is significantly more similar to the East
Asian insider model of corporate governance. There are also a variety of corporate structures
that are similar to the European model, with control maintained through a pyramidal type of
ownership and control. In India, the number of corporate organisations that reflect the pure
outsider model is relatively modest.

The speed of corporate governance reform would be mainly determined by the

reconfiguration of company and bank boards of directors. The majority of private sector
enterprises in India follow the 'insider' model, in which the 'founding/promoter' family
oversee all company activities. Even in the public sector, organisations and banks exhibit
comparable forms of governance that do not completely protect the interests of common
shareholders. As a result, the boards of directors of corporations, banks, and institutions
should be reformed and become really autonomous and independent. Boards of private-sector
enterprises should include a majority of independent non-executive directors. The boards of
PSUs, PSBs, and DFIs should be reorganised to make them more professional, and their
boards should become the focal points of governance. The quality of corporate governance in
India cannot be enhanced simply by putting a majority of non-executive directors on boards.
Surprisingly, non-executive directors already make up a sizable majority of firm boards in
India! The key reason that the level of corporate governance in all such firms is subpar is that
the majority of these non-executive directors are handpicked by the promoters to fit their
personal needs. Second, just because the Chairman's role is separate from that of the CEO
does not indicate that the number of independent members on boards should be fewer than
one-half. In many family-owned businesses, the non-executive Chairman's position is held
by a member of the promoter group. Prior to the Firms Act, which made it essential for
companies with a paid-up capital of Rs. 5 crore or more to have a managing director, there
were a number of family-owned businesses with boards made up entirely of non-executive
directors. As a result, it is unrealistic to expect that a large share of non-executive directors
will inevitably result in better corporate governance. The key issue is the fraction of really
independent directors on corporate boards. To give a significant boost to the corporate
governance reform effort, the Companies Act should be modified as soon as feasible to
integrate all of the improvements advocated above by this Group. The highest emphasis
should be given to law revisions that would require a majority of independent directors as
well as board committees headed by independent directors.

CORPORATE GOVERNANCE STRUCTURE IN RIL

Reliance Industries Limited strives to implement the finest Corporate Governance standards
while keeping in mind worldwide Corporate Governance regulations and the practises of
well-known global corporations. Among the best-implemented global governance rules are:

 The Company has a designated Independent Director who has a specific duty to play.
 Every quarter, the Company's Stakeholders' Relationship Committee of Directors
reviews all securities-related filings with Stock Exchanges and SEBI.
 The Company has separate Board Committees for Corporate Governance, stakeholder
interaction, and Board member nomination.
 Independent auditors also perform internal audits for the company.
 The Company additionally has a quarterly secretarial audit performed by an
independent company secretary who works full-time. The quarterly secretarial audit
reports are presented to the Board, and the annual secretarial audit report is included
in the Annual Report.
CONCLUSION

Corporate governance is a framework for monitoring, managing, and controlling commercial

entities. The shareholders, as owners of the corporate entity, are at one extreme of the scale
since they offer the ultimate risk capital. The'managers' or executive directors of the firm, on
the other hand, are in charge of the company's day-to-day operations. The full board of
directors is responsible for directing the company's activities as the elected representatives of
the shareholders. As corporate owners, shareholders are required to monitor and assess the
company's activities as well as the performance of the whole board of directors, particularly
the efficacy of full-time or executive directors. A effective corporate governance structure
promotes symbiotic relationships among shareholders, executive directors, and the board of
directors, allowing the firm to be run efficiently and rewards to be distributed evenly among
owners and stakeholders.

The majority of the key standards put out by the International Institutions, as well as the
principles of good corporate governance, are pretty clearly stated in India's Companies Act.
SEBI has recently enhanced these regulations. Based on the recommendations of a corporate
governance expert group, SEBI has asked all stock exchanges to revise their Listing
Agreements to include new terms requiring listed businesses to strengthen their governance
standards.