Representational image of a boardroom. (Source: Pixabay)

Board Failures: A Series Of Columns On Corporate Governance Crises

BloombergQuintOpinion

From grave incidents of alleged fraud and mismanagement to underperformance, conflicts of interest and culture clashes – Indian companies have put every flaw on display. Each time investors were left asking – “what in heavens was the board doing?”

This series of columns addresses the many issues surrounding board governance in India.

A dog is silhouetted on a farm at sunset. (Photographer: Brendon Thorne/Bloomberg)
A dog is silhouetted on a farm at sunset. (Photographer: Brendon Thorne/Bloomberg)

- By Menaka Doshi

Over the last decade and more India has put in place one of the most rigorous corporate governance frameworks in the world, one that has often been ahead of changes in other countries.

So before a government committee gets itchy to change the law or add one...that’s not what needs changing. But a few other things do...

Board Failures: A Series Of Columns On Corporate Governance Crises

- By Cyril Shroff

While efforts towards legal compliance continue to be a top priority, embedding good governance practices into the fabric of corporate culture in India will entail addressing some tough questions.

  1. Why are boards still ineffective in dealing with a governance crisis?
  2. As institutional ownership rises, are boards actively increasing governance sophistication?
  3. Is it time to deal with board dysfunctionality arising from a narrative that demonises promoters?
  4. Is over-regulation disincentivising board effectiveness?
  5. Are we addressing structural gaps that deter high-quality professionals from directorships?
A police officer directs traffic in Singapore. (Photographer: SeongJoon Cho/Bloomberg)
A police officer directs traffic in Singapore. (Photographer: SeongJoon Cho/Bloomberg)

- By Umakanth Varottil

Even though public enforcement is the principal mechanism for implementing corporate governance in India, the track record of its utilisation paints a bleak picture. In the case of private enforcement, victims—who are generally minority investors in companies—have access to a menu of options to seek remedies for expropriation or abusive conduct suffered at the hands of managements or controlling shareholders. Corporate governance in India is at crossroads. Where from here?

A stop sign at a metal plant. (Photographer: Waldo Swiegers/Bloomberg)
A stop sign at a metal plant. (Photographer: Waldo Swiegers/Bloomberg)

- By Amit Tandon

Directors should task themselves with protecting the promoters from themselves, and in professionally managed companies, managements from themselves. This alone will help directors earn the trust of the company, its stakeholders, the regulators and investors, and to play the part that they are elected to play.

Board Failures: A Series Of Columns On Corporate Governance Crises

- By Nawshir Mirza

As long as the controlling shareholder rules the roost, the hens in that nest will do his bidding, regardless of the rituals that regulators prescribe for the flock. A basic failing of capitalism is to measure success by growth rather than by survival. The eight-ton Tyrannosaurus Rex is history. The unicellular Cyano-bacteria is still around after nearly three billion years.