Question

Role of directors in corporate governance in india

Answer 1

With the fiasco of Satyam and Sahara in India and the Enron, Worldcom, Permalet, the multinational newspaper group Hollinger Inc. Newyork Stock Exchange and many more debacles in the world, there is a need to pay more attention on the quality of corporate governance. The role and responsibilities of Board of Directors has emerged as an important issue in examining the causes of collapses. This has created much debate on what actually is the role of directors in directing and managing their companies. Though Cadbury Committee on Corporate Governance submitted their report in December 1992 but nothing significant as far as concepts, regulations and their implementations are concerned has changed despite of globalization of businesses and increase in public participation in stock markets. This is the right time to review the role of board of directors and to overhaul the corporate governance in the country.

This paper makes a modest attempt to examine the role of boards of directors in light of institutional contingencies and recent best practice governance, guidelines and regulations such as the United Kingdom Higgs Review and the United States Sarbanes-Oxlay Act 2002. Special attention has been paid to discuss the role and responsibility of independent directors and implications for corporate governance innovation. It concludes by posing questions about recent corporate governance transformations and providing suggestions on appropriate roles and responsibilities that should be enshrined to independent directors. In addition to this, a mechanism of how independent directors should be selected has been suggested.

Answer 2

Corporate Governance is concerned with the functioning of Board of Directors (BODs) –its structure, styles, process, their relationships and roles, activities etc. ... The board's primary role is to monitor management on behalf of the shareholders. Board of directors is the important element of Corporate Governance.