Corporate governance legislation finds no favour with India Inc

Irani was of the view that corporate governance could not be legislated and the corporate governance is a mindset, which can be implemented only through belief of the board. Irani substantiated his argument by saying that the state of corporate governance in India was much better than the rest of the world.

While citing example, he said that in terms of independent directors, Tata experience was very contrary to the recommendations of the various committees. The directors most useful to the company were the ones who had covered the company for more than three years.

However, Naresh Chandra, Chairman of the Naresh Chandra committee on corporate governance set-up by department of company affairs said that Indian companies still have some ground to cover in terms of following corporate governance best practices in substance. He said that “the committee had delved into topics ranging from defining the role of chartered accountants, quality of certified audited work, pinning down responsibility of financial information shared by company and many other issues concerning corporate governance.”

Chandra stressed that the committee observed that though primary responsibility of preparing accounts is with management, auditors couldn’t be absolved of their responsibility.

The committee was also of the view that the 64,000 odd court cases against independent directors in India should be scrapped.