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Good Governance: A Timeless Principle

Good Governance: A Timeless Principle


Good governance has been a source of inspired thinking and committed action since ancient times, rooted in Sanskrit literature like the Mahabharata, Ramayana, Chanakya's Arthashastra, and other Nitis and Smritis. Many businesses have embraced its creative and positive aspects. The evolution of corporate governance began long before incidents of fraud, internal control failures, audit process inadequacies, and corruption in some companies.

Today, good governance is a global 'dharma' or 'mantra' for business, promoting integrity, fairness, transparency, accountability, and a commitment to maximizing value for all stakeholders.

Corporate Governance: Concept and Evolution

Robert Ian (Bob) Tricker introduced the term 'corporate governance' in his 1984 book, defining it as the way corporate entities are governed, distinct from the management of businesses within those companies. Corporate governance addresses issues facing the Board of Directors, including interactions with top management and relationships with owners and other stakeholders.

Corporate governance encompasses the internal and external factors affecting stakeholder interests, such as shareholders, customers, employees, suppliers, government regulators, and management.

Beyond Compliance: The Essence of Good Corporate Governance

Good corporate governance is more than compliance; it is a mechanism to achieve organizational objectives. Enterprise governance involves the responsibilities and practices exercised by the board and management to provide strategic direction, ensure objectives are achieved, manage risks appropriately, and use resources responsibly.

Enterprise Governance: Conformance and Performance

Enterprise governance includes two components:

  1. Corporate Governance (Conformance): Involves compliance with laws and regulations like the CA 2013 and SEBI rules, best practice governance codes, accountability, and assurance to stakeholders.
  2. Business Governance (Performance): Involves policies and procedures focusing on opportunities, risks, strategy, value creation, and resource utilization, guiding organizational decision-making.

Conformance addresses the "how" – the manner of achieving business results, including compliance, governance mechanisms, ethics, and codes of conduct. Performance addresses the "what" – what business to pursue, strategy, annual business plans, operations review, customer needs, market competition, etc.

Our Role in Corporate Governance

We help organizations develop value systems, rules, regulations, policies, and procedures for effective corporate governance. We ensure constant adaptation to the changing socio-business environment, often referred to as ESG (Environmental, Social, and Governance). We also support enterprise governance as part of our corporate advisory services, enabling integrated governance approaches for maximum stakeholder benefit.


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