Major Corporate Governance Initiatives in India
Beyond the committees, the Government of India and regulators have launched specific initiatives to enforce governance.
Key Initiatives
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1. National Financial Reporting Authority (NFRA)
- Context: Before NFRA, the ICAI (Institute of Chartered Accountants) regulated auditors. It was seen as lenient.
- Role: NFRA is an independent super-regulator that can punish auditors of large listed companies.
2. Investor Education and Protection Fund (IEPF)
- Purpose: If you forget to claim your dividends for 7 years, the money goes here.
- Role: Uses the money to educate investors and prevent fraud.
3. MCA21 (Ministry of Corporate Affairs)
- Success Story: One of the best e-governance projects.
- Impact: You can download the balance sheet of ANY registered company in India for Rs. 100. This transparency deters fraud.
4. Stewardship Code (SEBI)
- For: Mutual Funds and Insurance Companies (LIC).
- Rule: They can no longer be passive. They MUST attend shareholder meetings and vote against bad management decisions.
Note
Class Action Suits: The Companies Act 2013 introduced Class Action Suits (Section 245), allowing small shareholders to band together and sue a company for mismanagement. This is a powerful tool used widely in the USA (e.g., against Facebook/Google).
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