Good Governance

Topics: Corporate governance, Board of directors, Corporation Pages: 31 (5302 words) Published: November 1, 2013
C o r p o r at e G o v e r nanc e

Better Corporate Governance is the
Need of the Hour

T

he globalisation that
began in 1990s has
led to the increasing convergence of originally
separate initiatives in Corporate Governance. This process
has speeded up following the
financial turmoil in world financial markets in 2000. The
globalisation of the market
place within this context has
ushered in an era where the
traditional dimensions of Corporate Governance defined
within local laws, regulations

corporations are adopting
social auditing standards in
dealing with such matters
as the ethical sourcing of
products from developing
countries and the treatment of communities in
which they operate.
The fact is that good Corporate Governance practices
are now becoming a necessity
for every country and business
enterprise, and are no longer
restricted to the activities of
public-listed corporations in
advanced indusThe ongoing globalisation has ushered in an era where trial economies. traditional dimensions of corporate governance are In the midst of Interbeing increasingly challenged by circumstances and growing national pressure

events of global impact. Newer and newer Corporate
Governance norms are being formed across the globe. for adherence to The article probes this aspect, particularly in Common- good Corporate Binoy J. Kattadiyil
Nisha Binoy
Governance stanwealth perspective.
The authors are memers of the Institute.
They can be reached at jkattadys@yahoo.com
dards, the Commonwealth is well
and national priorities are beplaced to play an influential
financial systems and on
ing increasingly challenged by
role particularly as it comprises
public expenditure.
circumstances and events hav- l Experiences of public sec- a unique range of nations. ing an international impact.
tor reform and privatisaSome of these are:
tion in many countries Commonwealth
l
Institutional investors, as
have set demands on state- Perspective
As regulatory barriers bethey seek to deploy inowned enterprises and tween national economies are
ternationally the massive
government agencies to
funds they represent, are
address standards of integ- removed and global competiinsisting on high standards rity expected of the public tion for capital increases, investment capital will follow of Corporate Governance
service.
in companies in which l Other interesting develop- the path to those countries and they invest. In a number
ments in Corporate Gov- corporations that have adopted
of cases, these institutions
ernance include the rise of efficient governance standards.
have set their own Corpo“ethical investors” requir- These standards include acrate Governance standards ing corporations to pay ceptable levels of investor proas a measure for determinincreasing attention to the tection and board practices as ing their investment decisocial role of business, no- well as satisfactory accountsions. tably in the areas of envi- ing and disclosure standards.

l
Public attention through
ronment, health and safety, It was in this milieu that the
high profile corporate
ethnic and community requirement for determining
scandals and collapses
relations. More and more a set of guidelines, or princi762 The Chartered Accountant November 2005

has forced governments,
regulators and boards of
corporations to carefully
reconsider fundamental
issues of Corporate Governance as essential for
public economic interest.
In addition, the volatility
and instability experienced
in emerging markets in
recent times has drawn
attention to the implications of corrupt practices
and mal-administration in
national and international

ples, that could appropriately
represent the Commonwealth
approach to Corporate Governance was identified and
formulated. However, it was
clearly recognised that the notion of a “one size, fits all” type of universal code was not only
inappropriate but undesirable
also. In any...
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