Question

What are the prerequisites of sound corporate governance? Explain with specific reference to the Indian context.

03 Aug 2025
Answer :
Word Count : 1025
Corporate governance refers to the system by which companies are directed and controlled, encompassing the mechanisms, processes, and relations by which corporations are regulated and operated. It ensures accountability, fairness, and transparency in a company’s relationship with its stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community. Sound corporate governance is essential for sustaining investor confidence, achieving long-term growth, and maintaining ethical business conduct. There are several prerequisites for achieving sound corporate governance, particularly within the Indian context where regulatory frameworks and cultural practices influence corporate behavior. One of the fundamental prerequisites for sound corporate governance is a strong legal and regulatory framework. In India, the Companies Act, 2013 lays the foundation for corporate governance standards, supplemented by the Securities and Exchange Board of India (SEBI) regulations and guidelines issued by the Institute of Company Secretaries of India (ICSI). These laws mandate specific governance structures, disclosure requirements, and compliance mechanisms to protect shareholder interests and ensure transparency. For example, SEBI’s Listing Obligations and Disclosure Requirements (LODR) specify conditions ____ _______ ____ __________ ______ ___ ___ ________ ________ ___.
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