23 Feb 2022 Ankit Chadha

What is The Significance of Corporate Governance in India?

Corporate Governance | TRC Corporate Consulting

Before understanding the importance of corporate governance in India, you must know the answer to the question, what is corporate governance in India? In simple words, corporate governance comprises the social and functional facets of a business. It is the system by which organizations are governed and administered. Corporate governance influences how the goals of a business are set and accomplished, how risks are scrutinized and calculated, and how internal performance is enhanced. Because of its broad scope, the overall mandates of corporate governance can be outlined as such:

  • To be a factor of a system of principles, policies, procedures, specified responsibilities, and accountabilities used by stakeholders and to operate through the fundamental disputes of interest that exist in the corporate form.
  • To control the communication between various participants in shaping a company’s operation and the direction in which it is progressing. These participants are usually stakeholders, a board of executives, and company supervisors. Corporate governance seeks to determine how to reach the most efficient strategic conclusions.

To make sure there is transparency for the strong and stable economic growth of the organization. Clarity and transparency play a vital role in keeping the benefits of all shareholders protected.

In short, corporate governance is a set of principles or guidelines on which a company is regulated. It ensures that the corporate works in a way it is meant to work to complete the desired objectives. Corporate governance in India has been a part of the Indian corporate sector since the initial times, but the corporate governance collapse and scam of Satyam Computer Services Limited raised concerns about corporate governance in India. Thus, by partnering with a consulting firm like ours, you ensure complete compliance and flawless administration of your organization.

Salient Features of Corporate Governance in India 

 Corporate governance has progressed around certain fundamental principles, which form the foundation of rules and guidelines set for the corporate. Here are some of the salient features of corporate governance in India that you must know about:


Sharing relevant information about corporate in a timely and precise way is essential. It helps shareholders know about their privileges and keep a check on the day-to-day pursuits of the corporate.


It confirms the obligation of the person who takes decisions in the interest of others and the organization. Hence, individuals or authorities such as managers, chairpersons, directors, and other officials should be answerable to other corporate shareholders.


The independence of the top executive is essential for the smooth and efficient functioning of the corporate. The Board of Directors must work with no interference of any other concerned party in the corporate.

The Indian Model of Corporate Governance 

The Indian model of corporate governance has significantly been in tune with the international norms. It can be explained in the following ways:

  • The Companies Acts 2013 has stipulations regarding Independent Executives, Board Constitution, General meetings, Board meetings, Board procedures, Related Party Transactions, Audit Committees.
  • SEBI (Securities and Exchange Board of India) regulations guarantee to protect the investors and have authorized the firms to follow the best practices stated in the guidelines.
  • In the Indian model of corporate governance, Accounting Standards published by the ICAI (Institute of Chartered Accountants of India), the ICAI is an independent body and issues accounting standards. The revelation of financial statements is also made compulsory by the ICAI supported by the Companies Act 2013, Sec. 129.
  • Standard Listing Agreement of Stock Exchanges is applicable to the companies whose shares are listed on various stock exchanges.
  • Secretarial Standards issued by the ICSI (Institute of Company Secretaries of India) issues standards on ‘Meetings of the board of Directors,’ General Meetings,’ The companies Act 2013 enables this autonomous body to offer standards that each company must stick to, so that they are not penalized under the Companies Act itself.


The Benefits or The Importance of Corporate Governance in India 

Corporate governance in India means all laws, regulations, codes, and practices that describe how a company is administrated. It defines the rights and duties of all active agents within a company, attracting talent and financial capital, enhancing internal efficacy, and providing economic value to shareholders and investors in the long term.

The importance of corporate governance in India is made evident by the positive effects that arise when risks are regulated, and organizational processes are simplified and steady. Organizations can see many direct advantages by having good corporate governance in India, including:

Effective Processes – due to the repeatability and uniformity of tasks performed.

Visibility And Accountability of Errors – the repeatability and consistency in the future help identify the variations in processes.

Reduced Costs – when tasks are simplified, companies can eradicate the waste from scrap, rework, and any other expensive inadequacies.

Easier Operations – frequent interruptions from inconsistent procedures are excluded, as operation specifics become either ‘conform’ or ‘non-conform.’

Compliance – a culture that encourages corporate governance allows manufactured goods to reach the market while gathering their planned requirements and working accurately.

How Can TRC Corporate Consulting Help You with Its Exceptional Governance Services 

In current years, the fads and structures of businesses have radically altered. Thus, to integrate the changes while maintaining clarity, it is unavoidable to have a system for corporate governance in place. It helps in flawless functioning, profitable collaboration with the foreign market and assured stakeholders.

In addition, our consultants work with clients from many sectors and provide personalized solutions, such as internal audit services, fraud detection. This facilitates the business’s potential and enables a well-designed structure in compliance with the laws and regulations internally.

Contact us to know more about our services!

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