TABLE OF CONTENTS

CHAPTER TOPICS PAGENO

Introduction
Chapter I Corporate Governance in India- A Review 1
Chapter II The basic principles of Corporate Governance 1-2
Chapter III Corporate Governance under Companies Act 2013
 3.1 New provisions have been introduced of companies Act 2013 for directors and
shareholders
 3.2 Additional Provisions 2-3
Chapter IV Key Features of Corporate Governance in Companies Act 2013 4-6
Chapter V Need of Corporate Governance 6
Chapter VI Importance of Corporate Governance 7
Chapter VII Conclusion / Suggestion 8
Chapter VIII Bibliography 9
 ABSTRACT
Corporate or Corporation is derived from Latin term "corpus" which implies a "body".
Governance implies directing the procedures and frameworks put for fulfilling partner
desire. At the point when consolidated Corporate Governance implies an arrangement of
frameworks methods, policies, practices, set up by a corporate to guarantee that association
with different partners is kept up in straightforward and legitimate way. India's corporate
governance structure contains a scope of measures that advance responsibility of
governance and straight forwardness of money related and other data. On the. In the matter
of corporate governance authorization of the Companies Act 2013 merits say. The new Act
replaces the Companies Act, 1956 and expects to enhance corporate governance norms
streamline directions and improve the interests of minority investors. The present paper goes
for checking on the arrangement and different improvements in corporate governance in
India under the Companies Act, 2013
Key Words: Corporate governance, companies act, 2013, directors, auditors, corporate
social responsibility.
 Introduction
Corporate governance infers dealing with the business capably, promise to morals and
sufficient and opportunity on every single material issue in order to build general partner
certainty which will thus prompt effective designation of capital monetary development.
Governance is tied in with running the organization, yet great that is run reasonably and
straight. The Companies Act, 2013 was passed by the Rajya Sabha on eighth August 2013
clearing route for another organization law and got the consent of the president on 29 th
August, 2013. The Act, 2013 replaces the current Companies Act, 1956 which was
authorized 57 years prior. The new Act looks to introduce more straight forwardness and
governance in the corporate bodies other than making the fundamental condition for
development in the present worldwide structure. The Act supports great governance rehearses
by putting the onus on free executives to get oversight the working of the Board and secure
the enthusiasm of minority investors. The new Act is a noteworthy point of reference in the
corporate governance circle in India and is probably going to have huge effect on the
governance of organizations in the nation.1
“Corporate governance is the framework by which companies are coordinated and
controlled. The sheets of executives are in charge of the governance of their companies. The
investor's part in governance is to delegate the executives and the reviewers to fulfil
themselves that a proper governance structure is set up. The obligations of the board
incorporate setting the organization's key points, giving the authority to place them into
impact, directing the administration of the business and answering to investors on their
stewardship.
Corporate Governance is the acknowledgment by administration of the unavoidable
privileges of investors as the genuine proprietors of the partnership and of their own part as
trustees for the benefit of the investors. It is about pledge to values, about moral business lead
and about making a qualification amongst individual and corporate finances in the
administration of an organization. Financial specialists from created nations are requesting
that Indian Companies take after global prescribed procedures with an accentuation on
corporate administration. The paper aims to to understand the concept of Corporate
Governance, to examine Corporate Governance Rules under Companies Act, 2013 and to
analyse various developments and present framework in Corporate Governance in India.2

1
Lugi Zingales, “corporate Governance”, universal Law publishing (2008), 2 nd edition, p57.
2
Sifuna, Anazett Pacy, “The prohibition of Insider Trading on Trial”, Journal of International Banking law and
Regulation.
 CHAPTER I
Corporate Governance in India- A Review
The first initiative in India was taken by confederation of India industry. India’s largest
industry and business association. The second major initiative was taken by security
exchange board of India (SEBI) as clause 49 of the listing agreement. The third initiative was
taken by Naresh Chandra committee and Narayana Murthy committee. These committees had
looked corporate governance from the point of view of stakeholders in particular that of
shareholders and investors. The committees have identified three key constitutes of corporate
governance as shareholders, the board of directors and the management. The committees
have identified three major aspects namely accountability, transparency and equal treatment
of all shareholders. At the heart of the committee’s report are the responsibilities, and
obligations of the boards and the management in instituting the systems for good corporate
governance.
In 2009 ministry of corporate affairs published a new set of “corporate governance voluntary
guidelines 2009” to encourage companies to adopt better in running of the board and board
committees, appointment and rotation of external auditors and creating whistle blowing
mechanism. The guidelines introduced are recommendatory in nature which can be broadly
divided into six parts which includes board of directors, Responsibilities of the board, Audit
committees, Auditors, Secretarial audit and institution of mechanism for whistle Blowing.
While some companies in India have been actively pursuing high standard of governance,
majority of companies has not taken in guidelines seriously.3

CHAPTER II
The Basic Principles of Corporate Governance
Fairness- fairness refers to equal treatment, for example, all shareholders should receive
equal consideration should receive equal consideration for whatever shareholdings they hold.
In additional to shareholders, there should also be fairness in the treatment of all
stakeholders including employees, communities and public officials. The fairer the entity
appears to stakeholders, the more likely it is that it can survive the pressure of interested
parties.
Accountability- corporate accountability refers to the obligation and responsibility to give an
explanation or reason for the company’s actions and conduct.
Responsibility- the board of directors are given authority to act on behalf of the company.
The board pf directors are responsible for overseeing the management of the business’ affairs
of the company’ appointing the chief executive and monitoring the performance of the
company. In doing so, it is required to act in the best interest of the company.4
3
Ashish K Bhattacharya, “corporate Governance in India”, Oxford University Press (2011), 2 nd edition p105.
4
Dr. Avatar Singh, “Company Law”, Lucknow Delhi Allahabad(2018), 17 th edition, p587.
 Accountability goes hand in hand with responsibility. The board of directors should be
made accountable to the shareholders for the way in which the company has carried out its
responsibilities.
Transparency- A principle or good governance is that stakeholder should be informed about
the company’s activities, what its plains to do in the future and any risks involved in its
business strategies.
Transparency means openness, a willingness by the company to provide clear information
to shareholder and other stakeholder. For example, the transparency refers to the openness
and willingness to disclose financial performance figures which are truthful and accurate.
Disclosure of material- matters concerning the organisation performance and activities
should be timely and accurate to ensure that all investors have access to clear, factual
information which accurately reflects the financial, social and environmental position of the
organisation.
Organisation should clarify and make publicly known the roles and responsibilities of the
board and management to provide shareholders with a level of accountability.5

CHAPTER III
Corporate Governance Under the Companies Act 2013
Many high-profile corporate governance failure scams like the stock market scam, the UTI
scam, Ketan Parikh scam, Satyam scam, which was severely criticized by the shareholders,
called for a need to make corporate governance in India transparent as it greatly affects the
development of the country.
The Indian Companies Act of 2013 introduced some progressive and transparent processes
which benefit stakeholders, directors as well as the management of companies. Investment
advisory services and proxy firms provide concise information to the shareholders about
these newly introduced processes and regulations, which aim to improve the corporate
governance in India.6
Corporate advisory services are offered by advisory firms to efficiently manage the activities
of companies to ensure stability and growth of the business, maintain the reputation and
reliability for customers and clients. The top management that consists of the board of
directors is responsible for governance. They must have effective control over affairs of the
company in the interest of the company and minority shareholders. Corporate governance
ensures strict and efficient application of management practices along with legal compliance
in the continually changing business scenario in India. 7

5
Ibid pp 588.
6
www.blog.ipleaders.in.
7
Dr. S.C Tripathi, “Modern Company law”, central law publication(2010), 5 th edition, p105.
Corporate governance was guided by Clause 49 of the Listing Agreement before introduction
of the Companies Act of 2013. As per the new provision, SEBI has also approved certain
amendments in the Listing Agreement so as to improve the transparency in transactions of
listed companies and giving a bigger say to minority stakeholders in influencing the decisions
of management. These amendments have become effective from 1st October 2014. 8

3.1 New provisions have been introduced of companies Act 2013 for directors and
shareholders.
 One or more women directors are recommended for certain classes of companies.
 Every company in India must have a resident directory.
 The maximum permissible directors cannot exceed 15 in a public limited company. If
more directors have to be appointed, it can be done only with approval of the
shareholders after passing a special resolution.
 The independent Directors are newly introduced concept under the Act. A code of
conduct is prescribed and so are other functions and duties.
 The independent directors must attend at least one meeting a year.
 Every company must appoint an individual or firm as an auditor. The responsibility of
the Audit committee has increased.
 Filing and disclosures with Register of companies has increased.
 Top management recognizes the rights of the shareholders and ensures strong co-
operation between the company and the stakeholders.
 Every company has to make accurate disclosure of financial situations, performance,
material, matter, ownership and governance. 9
3.2 Additional Provisions
 Related Party Transactions – A Related Party Transaction (RPT) is the transfer of
resources or facilities between a company and another specific party. The company
devises policies which must be disclosed on the website and in the annual report. All
these transactions must be approved by the shareholders by passing a Special
Resolution as the Companies Act of 2013. Promoters of the company cannot vote on
a resolution for a related party transaction.
 Changes in Clause 35B – The e-voting facility has to be provided to the shareholder
for any resolution is a legal binding for the company.
 Corporate Social Responsibility – The company has the responsibility to promote
social development in order to return something that is beneficial for the society.
 Whistle Blower Policy – This is a mandatory provision by SEBI which is a vigil
mechanism to report the wrong or unethical conduct of any director of the company.10

8
K Prashad, “corporate Governance”, Pentice Hall India learning Pvt Ltd (2011), 2 nd edition, p1105.
9
T. N Satheesh Kumar, “Corporate Governance; principles and practices”, Pearson education India (2011), 4 th
edition, p23.
10
Ibid pp 24-25.
 CHAPTER IV
Key Features of Corporate Governance in Companies Act, 2013
The Companies Act, 2013 spotlights on great corporate governance hones by expanding the
parts and duties of the Board, securing investors' enthusiasm, acquiring a revelation-based
administration and inherent prevention through self-direction.11 The 2013 Act fundamentally
changes the way companies are represented. The Act accommodates the accompanying
arrangements:
Board Functioning Appointment of Board
The Companies Act, 2013 gives that an open and additionally a privately owned business
can have a greatest of fifteen chiefs on the Board and naming in excess of fifteen executives
would require endorsement of investors through an uncommon determination in the General
Meeting. It likewise accommodates arrangement of no less than one lady executive on the
Board for such class or classes of companies as might be recommended. The Act makes it
required for an organization to have least one executive who has remained in the nation for a
International Journal of Pure and Applied Mathematics Special Issue 960time of 182 days in
the past Calendar year. 12
Disqualification of Directors
The Companies Act, 2013 makes executives' exclusion more stringent, incorporates more
investigation around related gathering exchanges. The 2013 Act incorporates the
accompanying extra grounds of preclusion:
(I) A man who has been sentenced an offense managing related gathering exchanges
whenever amid the previous five years.
(II) (ii) The directorship in privately owned businesses has additionally been brought
under the ambit of exclusion on ground for non-documenting of yearly money
related explanations or yearly returns for any persistent time of three years, or
inability to compensate stores for over a year.
Number of Directorships
According to the provision of the Companies Act, 2013, a man can't turn into an executive
in excess of 20 companies rather than 15 as gave in the Companies Act 1956 and out of this
20, he can't be chief of in excess of 10 open companies.

Independent Directors
The importance of the term independent executive given in the Companies Act, 2013
contains the majority of the qualities of the posting understanding. An independent chief
ought to be a man of uprightness and have significant aptitude and experience. The Act
expresses that independent chief ought to not have any material monetary association with
the organization, its promoters, executives and auxiliaries which can influence the autonomy
of the executive either in the current budgetary year or quickly going before two years. The
11
S.C Das, “company law in India; an evaluation”, Central Law publication (2015), 3 rd edition, p 675.
12
Meghna Thapar “Corporate Governance in India”, Journal of Economic and social Development.
Act accommodates the accompanying arrangements regarding independent chiefs: The
Companies Act, 2013 states that each recorded organization will have no less than 33% of
aggregate number of executives as independent chiefs, with any portion to be adjusted off as
one. The focal government will have the ability to recommend least number of independent
executives in different class of open companies.
Code of Conduct for Independent Directors
Schedule IV of the Act accommodates a Code for Independent Directors which an
independent executive needs to take after. "Code for independent executives" contains
definite rules for professional lead, parts and duties. It covers the accompanying perspectives:
Professional Conduct; Seek illumination of data; Safeguard the interests of all partners;
Exercise obligations and duties in a real way; and Evaluation of the execution of board and
administration and so forth
Liabilities of Independent Director
Under the Companies Act, 2013, an independent chief and a non-official executive not being
promoter or, will be held at risk, just in regard of such demonstrations of oversight or
commission by an organization, which had happened with his insight, inferable through board
forms, and with his assent or where he had not acted determinedly.
Committees of Board Audit Committee
Section 177 of the Companies Act, 2013 makes review panels compulsory for recorded
companies and other recommended classes of companies. The Act gives that review panel
should comprise of least of three chiefs with independent executives framing dominant part.
The 1956 Act did not endorse any scholastic or professional capabilities for executives. The
2013 Act gives that dominant part of individuals from Audit Committee including its
chairperson might be people with capacity to peruse and comprehend the money related
articulations.
Nomination and Remuneration Committee
Section 177 of the Companies Act, 2013 makes review boards compulsory for recorded
companies and other recommended classes of companies. The Act gives that review panel
should comprise of least of three executives with independent chiefs framing dominant part.
The 1956 Act did not endorse any scholarly or professional capabilities for executives. The
2013 Act gives that dominant part of individuals from Audit Committee including its
chairperson should be people with capacity to peruse and comprehend the directors.
The Corporate Social Responsibility Committee the Act gives that an organization meeting
certain conditions ought to constitute a Corporate Social Responsibility Committee of the
Board, comprising of least of three executives. The Committee should comprise of at least
one independent executive. The CSR advisory group should plan and screen CSR strategies
and talk about the same in the Board's report. Board needs to endorse CSR strategy and
reveal the substance in the board report and place it on the organization site.13

13
B.F Dravis, “Role of independent Directors in Corporate Governance”, press education India (2016), 2 nd
edition, pp872-874.
 CHAPTER V
Need for Corporate Governance
The need for corporate governance is highlighted by the following factors
(i) Wide Spread of Shareholders: Today a company has a very large number of shareholders
spread all over the nation and even the world; and a majority of shareholders being
unorganised and having an indifferent attitude towards corporate affairs. The idea of
shareholders’ democracy remains confined only to the law and the Articles of Association;
which requires a practical implementation through a code of conduct of corporate
governance.
(ii) Changing Ownership Structure: The pattern of corporate ownership has changed
considerably, in the present-day-times; with institutional investors (foreign as well Indian)
and mutual funds becoming largest shareholders in large corporate private sector. These
investors have become the greatest challenge to corporate managements, forcing the latter to
abide by some established code of corporate governance to build up its image in society.
(iii) Corporate Scams or Scandals: Corporate scams (or frauds) in the recent years of the past
have shaken public confidence in corporate management. The event of Harshad Mehta
scandal, which is perhaps, one biggest scandal, is in the heart and mind of all, connected with
corporate shareholding or otherwise being educated and socially conscious. The need for
corporate governance is, then, imperative for reviving investors’ confidence in the corporate
sector towards the economic development of society.
(iv) Greater Expectations of Society of the Corporate Sector: Society of today holds greater
expectations of the corporate sector in terms of reasonable price, better quality, pollution
control, best utilisation of resources etc. To meet social expectations, there is a need for a
code of corporate governance, for the best management of company in economic and social
terms.
(v) Globalisation: Desire of more and more Indian companies to get listed on international
stock exchanges also focuses on a need for corporate governance. In fact, corporate
governance has become a buzzword in the corporate sector. There is no doubt that
international capital market recognises only companies well-managed according to standard
codes of corporate governance. 14

CHAPTER VI
Importance of Corporate Governance in India

14
R. K Agrawal, “Companies Study of Indian Companies Act, 2013”, (1996), 8 th edition, journal of Management.
A company that has good corporate governance has a much higher level of confidence
amongst the shareholders associated with that company. Active and independent directors
contribute towards a positive outlook of the company in the financial market, positively
influencing share prices. Corporate Governance is one of the important criteria for foreign
institutional investors to decide on which company to invest in. The corporate practices in
India emphasize the functions of audit and finances that have legal, moral and ethical
implications for the business and its impact on the shareholders. The Indian Companies Act
of 2013 introduced innovative measures to appropriately balance legislative and regulatory
reforms for the growth of the enterprise and to increase foreign investment, keeping in mind
international practices. The rules and regulations are measures that increase the involvement
of the shareholders in decision making and introduce transparency in corporate governance,
which ultimately safeguards the interest of the society and shareholders. Corporate
governance safeguards not only the management but the interests of the stakeholders as well
and fosters the economic progress of India in the roaring economies of the world.15

VII. Conclusion/Suggestion
Under the companies Act, 2013, with regards to the better Corporate Governance motivation,
the part of the Board turns out to be greatly basic. Numerous arrangements relating to
autonomy of chiefs, inspectors, strict exposure standards and insurance of financial

15
Ashish K Bhattacharya, “corporate Governance in India”, Oxford Press University (2011), 2 nd edition p108.
specialists will have wide ramifications and acquire more noteworthy straightforwardness and
responsibility in the working of the organization and in the meantime, limit the occurrences
of corporate cheats. Its key target isn't unimportant satisfaction of the necessities of law yet in
guaranteeing duty of the Board in dealing with the organization in a straightforward way to
maximize partner esteem. Be that as it may, in obvious sense, Good corporate governance
goes past tenets and controls that the Government can set up. It should originate from inside,
which would empower the association to set up profitable association with its inward clients
and enduring business association with its outside clients. The genuine onus of accomplishing
wanted levels of corporate governance lies with corporations themselves and not in outside
measures.
I suggest that the condition of corporate administration look into in developing
business sector setting is probably going to be diverse given its exceptional institutional
settings. This paper is to comprehend whether the worldwide research on corporate
administration in top layered universal diaries mirrors the developing enthusiasm for India
and whether the examination distributed in the best diaries in India mirror the distinctions
opposite the worldwide talk on corporate administration. Is there an improvement of "setting
particular" speculations inside India which mirror the extraordinary institutional setting that
the corporate is to be made.

VIII. Bibliography
Primary Source
1. Bhattacharya K Ashish, “Corporate Governance in India”, Oxford University Press,
2011, 2nd edition.
2. Das SC, “Company Law in India; An evaluation”, Central law publication, 2015,
3rdedition.
3. Dravis B F, “Role of Independent directors in corporate Governance”, press education
In India, 2011, 4th edition.
4. Kumar Satheesh TN, “Corporate Governance; Principles and Practices”, Pearson
Education 2011, 4th edition.
5. Prashad K, “Corporate Governance”, Prentice Hall India learning Pvt Ltd, 2011, 2 nd
edition.
6. Singh Avatar, “Company Law”, Lucknow Delhi Allahabad, 2018, 17th edition.
7. Tripathi S C, “Modern Company Law”, Central Law Publication, 2010, 5th edition.
8. Zingales Lugi, “Corporate Governance”, Universal Law Publishing, 2008, 2nd edition.

Secondary source
Journals
1. Sifuna, Anazett Pacy, “The prohibition of Insider Trading on Trial”, Journal of
International Banking law and Regulation.
2. Meghna Thapar “Corporate Governance In India”, Journal of Economic and
social Development.
3. R. K Agrawal, “Study of India Companies Act 2013’, Journal of Management.
Website
www.blog.ipleaders.in (12/06/22) (22 PM)