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Introduction
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An Informed Approach
India had attempted to establish a sound economy on a socialistic
platform for the better part of the post-independence era. While
such a system would be ideologically perfect for India, it could not
be sustained for extended periods. Awareness of the global changes
in power play and the obvious success of the capitalistic economy
mooted India to open up her capital markets in the 90s. This was a
beginning of a new era for Corporate India. With this India made a
conscious decision to integrate with the rest of the capital world,
which will continue to have an indelible effect on the country's
macroeconomic environment for years to come.
Leading to informed changes
The new economic approach ushered in radical changes in the Indian
industrial turf. Growth and expansion have become imperative to
survival in the current economic order. All companies whether small,
medium or large, whether listed or unlisted need to strategize to
meet the challenges of the forthcoming years. The position of a
Director, which has thus far been occupied by the promoters
themselves are now being relegated to trained, hard-nosed
professionals. It is mandatory for listed companies to follow
stipulations laid down by regulatory bodies. Unlisted companies also
come under the purview of regulations and they need to follow norms
for procuring the much-needed funds for survival. This brought about
the need for professionals to be better informed.
Introducing to informed activities
The changes spurred the growth of Indian industries and heralded the
professional reorganization of all sectors. The financial sector
also witnessed some sweeping changes to support market initiatives.
Increased participation of private enterprise was encouraged in all
sectors by a general decrease in state participation in economic
activities. Liberalization has brought about a phenomenal increase
in the number of both listed and unlisted companies in India and
consequently an increase in the number of directors on board leading
to informed activities.
Bringing informed regulations
India faced the initial hiccups of corporate freedom and the
situation demanded for systems to be installed. The earliest draft
for Corporate Governance in India was made in the year 1996. The
Kumaramangalam-Birla committee was officially formed to formulate
policies for Corporate Governance, which was enforced for the first
time on Corporate India in the year 2000. Subsequently other
regulatory bodies have also contributed to embellish these codes of
conduct. Corporate Governance acknowledges the globalization
scenario witnessed in India and has been framed to introduced
professionalism, transparency and accountability of corporations to
their shareholders, funding agencies and the state. A legal
framework has also been evolved to tackle issues arising in the
emerging Indian market.
Stipulating Informed Reporting
Recognizing that funding is pivotal to growth, the rules of
Corporate Governance have stipulated reporting systems that are more
transparent to safe guard investor interests. A uniform code for
reporting became mandatory for listed companies in the year 2000.
While this is mandatory for listed companies, it is desirable for
unlisted companies for reaching new heights. Such a move paved way
to attract foreign investment in the Indian market. The growth in
foreign investments has been dramatic in the last decade. This has
prompted many companies to become proactive in becoming investor
friendly and they have on their own accord started following the
Generally Accepted Accounting Principles (USGAAP). Some Indian
corporations are also listed in foreign exchanges and it looks like
India will soon catch up with the rest of the developed world
although
had a rather late start.
Demanding Informed Analysis
The capitalist firm
being one of the prime economic institutions of a modern economy,
analysis of its performance assumes immense significance. The onset
of the borderless communication era, the astute sensibility with
phenomena called M&A has been accepted; newer laws and accounting
standards hankering to offer corporate understanding to even the
most casual bystanders are only a few of those in circulation which
land a huge responsibility on the Directors.
Necessitating Informed Support
To get ahead and keep going every Corporate Director has to be armed
with a truly overwhelming amount of varied and often changing
information.
Directors are compelled to get conversant
The seemingly ever-expanding rules of Corporate Governance that came
into effect as recently as the year 2000. The legal issues related to
their role in the company and the activities of the company
pertaining to investors, shareholders and the like. The global
changes that may affect their respective sectors. Updates on
reporting changes for more transparency. Addressing investor needs
Addressing socio-political and environmental issues Having a good
relationship with the media Latest sector happenings
The best strategy for
directors to combat the situation is to avail of services of experts
who have the qualification, knowledge, skill sets and experience to
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