Aiming to achieve economic efficiency in the corporate landscape, the Industry Association on Confederation of Indian Institute, coined the term Corporate Governance in the late 1990s. Touching the four cornerstones of transparency, responsibility, fairness, and accountability in managing the company operations, corporate governance helps in profit maximization and shareholder welfare. Corporate governance is a form of self-regulation, legal standards, security regulation, and an interaction of the best legal practices.
Our corporate governance team at Areness ensures to give the best advice to some of the country’s leading companies from varied sectors and industries on all aspects. We guide directors, management, and committees to adopt best practices, especially in crisis management, evaluation of malpractices such as malfeasance and misfeasance, oppression, mismanagement, related party transactions, etc. Ensuring that the interests of the companies are safeguarded from every aspect, we support in the constitution of internal investigation committees and enforcement of byelaws.
Following a sustainable, contemporary, value-driven, and relevant approach, we help businesses expand their operations and take advantage of market opportunities. Aligning a company’s operations and interests of its stakeholders and senior management in a systematic manner involves a system of rules, processes, and practices, which are defined under corporate governance. Meaning isn’t enough to comprehend the importance of corporate governance, it’s essential to delve deep into its benefits.
Benefits of Corporate Governance
- Keeping transparency at the forefront, good corporate governance ensures to align the interests of shareholders and other company’s staff, set defined rules, and guide leadership.
- It helps build trust with public officials and investors.
- It facilitates returns and opportunities, while reducing financial losses and risks.
- Stakeholders and investors get a clear idea of the company’s goals and ethics.
- Corporate governance is the best plan to ensure long-term success.
Besides, we keep our clients updated on all the new guidelines laid down in respect of corporate governance and CSR regulations regularly. It helps avoid any departmental action against the Board of Directors. In the event of disputes, we also represent the Management as well as the shareholders before different forums and tribunals.
According to a public opinion analysis, today’s business industry is not trustable and needs to be rooted with ethical standards. Business ethics and corporate governance work together to set well-defined, actionable governance plans entrenched with ethical values and conducts in their operations.
With our expertise in dealing with dynamic workplace situations proactively, we drive to stay ahead of the curve in our practice of corporate governance.
Theories of Corporate Governance
There are many theories that address the challenges by companies while ensuring proper corporate governance. Some of which are listed below.
- Agency Theory – This theory defines the relationship between a company’s shareholders and directors. When the company owner hires a manager or director to handle the operations and the hired individual works only for self-interest and not for the company’s growth and development.
- Stewardship Theory – Introduced in 1989 by Donaldson and Davis, this theory considers relationships and behaviors that are neglected in organizational economic theories. Here, the steward (manager) has the power to work in the interest of the company for organizational success, enhanced growth of the stakeholders, and increased wealth of shareholders.
- Resource Dependency Theory – Considering the inefficiency in working due to the risk involved in the dependence of companies on outside resources, the director ensures to bring resources to the firm to enhance firm’s performance and maintain efficiency. These resources can be in the form of information, suppliers, social groups, buyers, skill, dealers, etc.
- Stakeholder Theory – This theory incorporates the accountability of management to a wide range of stakeholders. Here, the manager focuses on balancing the interests of all stakeholders without any bias, while taking any managerial decisions.
Following the principles of corporate governance, we also advise companies on risk management, representation and best practices, investigations, review of charter and bylaws, board committee structures, succession planning for senior management and directors, party transactions, and enforcement and regulations.
Different countries have different regulations, which have led to the creation of five models of corporate governance – Anglo-American Model, German Model, Indian Model, Japanese Model, and Social Control Model.
Our experience in matters related to corporate governance and engagement with the regulators allows us to deliver our advice in a clear, concise, and practical manner.
