Exploring Indian Ancient Scriptures : Governance Practice With Covid19

INTRODUCTION

Corporate Governance is the collection of mechanisms, processes and relations by which corporation are controlled and operated. It includes monitoring the actions, policies, practices and decision of corporation, their agents and affected stakeholders. It is a practice to align the interest of stakeholders.

The subject came into force in the late 80’s and 90’s, when the corporate sector are surrounded with problems of corporate policies or unethical practices. It is a hot topic across the globe these days.

The exploration of governance can be found in Indian scriptures of Vedas that are based on the Kautilya’s Arthashastra which was also written in 4th Century BC. Manu Smriti says that without a proper ruler, the anarchy will results in citizens living in fear and thus kingship was instituted for the protection of the subject.

In Mahabharata (shanti parva) which declares the cheese of kingly duties and includes the various factors of good governance, right from punishing the criminal for supporting the meritocracy, ensuring security to enabling financial transactions.

Corporate entities plays a very vital role in Indian economy and modern society business environment. It is the backbone of any country that contributes its share in GDP, as technology is growing at a fast pace, there is a need for a requirement of a rigorous management.

Today a company has a very large number of stakeholders that are spread all over the nations and even the world. AS we have seen the idea of stakeholder democracy confined only to the law and AOA which requires a practical implementation through the code of conduct of governance.
A lot of research were undertaken during the year of Satyam collapse and were taken from the point of view of CEO and BOD characteristics influencing company performance and shareholder wealth maximization. But very limited research were undertaken from the philosophical and the ancient perspectives.

SCOPE OF STUDY : ANCIENT SCRIPTURES

The Arthashastra literary means the Discipline Of Politics. The scope of book includes nature of government, law, civil, criminal court system, ethics, economics, market and trade, diplomacy, theories of war, nature of peace, duties and obligation of the king.

When doing the research various interpretators found out there are some similarities with the present corporate governance framework. Arthashastra differentiate the duties of king in 4 ways :

• Raksha
• Vriddhi
• Palana
• Yogakshema

1. RAKSHA : means protection. IT is the obligation of the king to protect his people from dangers like in the modern society it is the duty of the CEO and BOD to protect or safeguard the interest of shareholders of the company . It is also linked with risk management, Audit Committee and its executive management.

2. VRIDDHI : means development and growth . It is the responsibility of king to ensure with sufficient resources and facilities and in nowadays can be seen with shareholder value enhancement, regulations and goodwill. The object of any business is wealth maximization through the maximization of profits.If the company follows the practice of good corporate governance leads them towards expansion, diversification , takeover of company.

3. PALANA : means maintenance and compliance that directly relates to the rules and regulations When we consider the corporate governance practices of SEBI, there is a separate clause entitled compliances which states that the company shall obtain a certificate from the auditors of the company regarding the compliances of conditions of corporate governance and annex the certificate with directors report wich is sent annually to all the shareholders of the company and stock exchange and along with the annual return filed by the company.

4. YOGAKSHEMA : means welfare now relates to social security system that is CSR. Today businessman are aware that society is the biggest force which control the entire business operations, fight from the scratch to finally produce because ultimately goods and services are consumed by the societies.

PILLARS OF CORPORATE GOVERNANCE

BENEFITS OF GOVERNANCE : AN EYE VIEW

1. Good CG ensures corporate success and economic growth.

2. It helps to maintain investor confidence and they can raise capital effectively and efficiently.

3. It lowers the capital cost.

4. There is a positive impact on share price.

5. It also minimize wastage, corruption, risk and mis-management.

GOVERNANCE IMPLICATION – COVID19

• With mass gathering discouraged or banned in many parts of the world, impacting the business in tough environment. During these times SEBI asked the listed entities to evaluate the impact of COVID19 pandemic on their business performances and financial both quantitatively and qualitatively and disseminate the same to investors.
• The SEBI has granted the various relaxations to listed entities in terms of timelines for filing of various reports or disclosures.
• It is important for listed entities to ensure that all available information about the impact of these on the company.
• There must be a pattern of disclosure to be followed by the listed entities so as to ensure the smooth functioning of the operations, its estimation on future operations, entity capital and financial resources, profitability and liquidity position, ability to service debt and other financial arrangement, internal financial reporting control, supply chain, and demand for its product and services.
• The listed entities should update investors on existing contracts or agreements where the non fulfillment of obligations by any party will have significant impact on their business.

OVERCOME THE TRUBULENCE : GOOD GOVERNANCE

• Company should take a top- down approach in reassuring staff of fair policies and lay down expectations.
• Readjustment of goals and plans to be made as per current scenario.
• Forward looking and pro-active model of communication and engagement helps to promote transparency and trust among stakeholders.
• Information and communication nee the dynamism and flexibility.
• Businesses that responds to the beginnings of the pandemic crisis with short term fixes to their processes and stakeholder policies are very well formalize with good corporate governance regulations. Eg. Flipkart, Tata Steel

CONCLUSION FOR INDIAN ANCIENT SCRIPTURES

The present study has made an attempt to cross check the influence of ancient Indian scriptures on the corporate governance framework in India. The studies shows that there is a clear cut evidence and its effect in todays CG framework. Also it is universally applicable in the formation of various management practices.

The Hindu scriptures stipulates the rulers to carry out actions that cause spiritual upliftment of the society and create a social condition wherein people can freely practice their social and spiritual duties.