We all love to read and speak about Corporate Governance. It is believed that the well-being of society and stakeholders are linked to positive business results achieved through good Corporate Governance. This ensures the creation of ample employment opportunities, timely payment of taxes, better quality products, quality of life, and so on. It is learned that Corporate Governance provides the ways, systems, procedures, and practices of managing a business in a way that stakeholders’ interest gets protected while achieving the organizational goals. Various dignitaries have given their input about Corporate Governance, which is good.
We have governance norms, acts, rules, and regulations that provide the best ways to deal with stakeholders. We have a list of disclosures to make to the stakeholders like Annual Disclosures, Event Disclosures, Quarterly Disclosures, Monthly Disclosures, and so on. We have to form a Board in a particular way wherein independence in decision-making is ensured.
We have to form committees and conduct meetings in a certain way. There are provisions which are dealing with Director’s remuneration, Related Party Transactions, Loans, and Investments.
We also have to give an account of the money spent through Annual Audited Accounts. We have to place Annual Report before the shareholders wherein we provide important information, explanation, and reports about how an organization has performed during the year, and have spent money to achieve a particular business result.
We also have to follow Accounting Standards and Secretarial Standards which are good. There are Business Responsibility, CSR, Energy, and Environmental disclosure requirements by which we seek to create a better society and optimum utilization of resources. There is a vigil mechanism that gives moral courage to internal stakeholders to point out irregularities, fraud, etc. There are codes of conduct, securities code, and various other codes that govern dealing in the securities of the company.
There are monitoring and punitive authorities for Corporate Governance. By doing so, we wish to create a better society and ensure that the country gets an economic boost.
Unfortunately, we do not have a monetary yardstick to measure the success of Corporate Governance. As of now, Corporate Governance is considered to be successful if the organization outperforms vis- a-vis to previous business results. The success story is discussed through different disclosures mediums like Directors’ Report, Corporate Governance Report, Management Discussions, and Analysis Report, etc., but the way of measuring success is not full proof and requires a pragmatic approach. The real success of the organization is clearly visible if the organization not only outperforms vis- a-vis to previous business results but also outperforms against predefined benchmarked business results. I am talking about the organization’s budget.
Stakeholders warrant benefit optimization, Risk optimization, and Resource Optimization. Certainly, these can be visible if the clear comparison of benchmarked results i.e. Budget vis-a-vis Actual vis-a-vis Previous results is formally presented as a statutory business results disclosure. This way business winners can be transparent and Corporate Governance success can be judged prudently. This will certainly help stakeholders to make wise decisions on investment and association.
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