Discuss the History of corporate governance in India.
Or What is the criterion of mandatory disclosure norms in India?
Ans. There have been several major corporate governance initiatives launched in India since the mid-1990s. The first was by the Confederation of Indian Industry (CII), India's largest industry and business association, which came up with the first voluntary code of corporate governance in 1998. Between 1998 and 2000, over 25 companies like Bajaj Auto, Hindalco, Infosys, Dr. Reddy's Laboratories, Nicholas Primal, Bharat Forge, BSES, HDFC, ICCI and many other voluntarily followed the code. In India, the real history of corporate governance dates back to the year 1992, following efforts made in many countries of the world to put in place a system suggested by the cadbury Committee. The Confederation of Indian Industry framed a voluntary code of corporate governance for listed companies in 1998. This was followed by the recommendations of the Kumar Mangalam Birla Committee set up in 1999 by SEBI culminating in the introduction of Clause 49 of the standard Listing Agreement to be complied with all the listed companies in stipulated phases. The Kumar Mangalam Birla Committee divided its recommendations into mandatory and non- mandatory. Mandatory recommendations included such issues as the composition of board, appointment and structure of audit committees, remuneration of directors, board procedures, additional information regarding management, discussion and analysis as a part of the annual report, disclosure of directors' interest, shareholders' rights and the compliance level o corporate governance in the annual report. Its non- mandatory recommendations included issues concerning the chairman of the board, setting up of remuneration committee, half yearly information of the shareholders, use of postal ballots in certain key decisions, appointment of nominee directors and obligations of institutional shareholders. Following CII and SEBI, the department of Company Affairs (DCA) modified the Companies Act 1956, to incorporate specific corporate governance provisions regarding independent directors and audit committees. In 2001-02, certain accounting standards were modified to further improve financial disclosures.
These were disclosures regarding party transactions, disclosure of segment income, revenue, profits and capital employed, deferred tax liabilities or assets, etc. Some of the : Corporate Governance Criteria are related to: (1) Mandatory disclosures by the Board of Directors and the Committees of the Board: (i) Frequency of Board meetings and Board committee meetings with dates and attendance.
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