Evolution of Corporate Governance in India: A Post-Satyam Scam Perspective.
This article is written by Leesha Agrawal, pursuing B.Com. LL.B. (Hons.) from the Institute of Law, Nirma University, Ahmedabad.
The Satyam scandal marked a significant turning point in the development of corporate governance in India by exposing critical deficiencies in corporate accountability, financial transparency, auditing practices, and regulatory oversight. The scandal not only weakened investor confidence but also revealed the inadequacy of existing governance mechanisms in preventing large-scale corporate fraud despite the presence of formal compliance frameworks. In response, India introduced substantial legislative and regulatory reforms aimed at strengthening governance standards, enhancing disclosure requirements, improving board independence, and increasing auditor accountability.
This article aims to examine the evolution of corporate governance in India from a post-Satyam scam perspective by analysing the legal and institutional frameworks pre and post the Satyam scam, often called India’s Enron scam, particularly under the Companies Act, governance regulations by the Securities and Exchange Board of India (SEBI). It further analyses the impact and effectiveness of the post-scam reforms in promoting investor confidence, transparency, board independence, and ethical business practices.
The article concludes by highlighting that while the reforms have significantly strengthened the governance mechanism in India, there are still gaps in adequate enforcement due several issues like promoter dominance, lack of independence of board, and lack of corporate accountability, as formal compliance and documentation does not enforce ethical corporate culture. The article highlights that there is a continuous need for corporate governance evolution in order to keep up with economic realities and promote corporate growth
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