Score:
9/15
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Topper’s Copy
GS3
Economy
15 marks
Why is good corporate governance important for companies in India? Discuss the major challenges in ensuring effective board governance.
Student’s Answer
Evaluation by SuperKalam
Demand of the Question
- Why good corporate governance is important for Indian companies
- What major challenges stop company boards from governing effectively
What you wrote:
Corporate Governance refers to the system of rules, process & practice through which corporates are directed, controlled & regulated.
In India, Companies Act of 2013, & SEBI LODR Regulation, provides institutional for corporate governance.
Corporate Governance refers to the system of rules, process & practice through which corporates are directed, controlled & regulated.
In India, Companies Act of 2013, & SEBI LODR Regulation, provides institutional for corporate governance.
Suggestions to improve:
- Could strengthen by adding context about India's corporate landscape (e.g., family-owned businesses dominating 60% of listed companies, making governance reforms crucial for investor confidence).
What you wrote:
[FLOWCHART: A central box containing the text "Importance of good corporate governance in India" has arrows pointing to six numbered points. Node 1 is "It promotes stakeholder confidence". Node 2 is "It help to prevent fraudulent of money" with a sub-note "Ex - Satyam scam (2009)". Node 3 is "Enhances utilization of resources available properly". Node 4 is "Held to be accountable for companies errors". Node 5 is "Maintain Long term business sustainability". Node 6 is "It enhances economic growth of the country".]
[FLOWCHART: A central box containing the text "Importance of good corporate governance in India" has arrows pointing to six numbered points. Node 1 is "It promotes stakeholder confidence". Node 2 is "It help to prevent fraudulent of money" with a sub-note "Ex - Satyam scam (2009)". Node 3 is "Enhances utilization of resources available properly". Node 4 is "Held to be accountable for companies errors". Node 5 is "Maintain Long term business sustainability". Node 6 is "It enhances economic growth of the country".]
Suggestions to improve:
- Could add specific benefits like improved access to capital markets (e.g., companies with better governance ratings attract 25-30% higher FDI).
- Can include regulatory compliance benefits (e.g., avoiding ₹1,000+ crore penalties imposed by SEBI for governance violations).
What you wrote:
Major challenges in ensuring effective corporate governance
1) Larger shareholder dominance, affect minority shareholder
2) Lack of board independence from promoters & management
3) Boardroom conflicts -> disputes over succession, leadership & shareholder rights. which undermine institutional stability
Ex - Recent Tata son (2016) boardroom dispute for appointment of chairman
4) Lack of information among board members to challenge management decision
Major challenges in ensuring effective corporate governance
1) Larger shareholder dominance, affect minority shareholder
2) Lack of board independence from promoters & management
3) Boardroom conflicts -> disputes over succession, leadership & shareholder rights. which undermine institutional stability
Ex - Recent Tata son (2016) boardroom dispute for appointment of chairman
4) Lack of information among board members to challenge management decision
Suggestions to improve:
- Could elaborate on family business dominance (e.g., Birla, Ambani groups where promoter families hold significant control, limiting independent oversight).
- Can discuss rubber-stamping by independent directors and lack of gender diversity (only 17% women directors on Indian boards as per recent data).
What you wrote:
Measures to be taken to overcome these challenges
1) Protect minority shareholder by ensuring their participation in key decision.
2) Ensure transparent selection & adequate autonomy of independent directors.
3) Empower audit committee to reduce fraudulent of finance
4) Strengthen SEBI monitoring & impose penalty for violation
5) Encourage diversity of expertise, into board members
Measures to be taken to overcome these challenges
1) Protect minority shareholder by ensuring their participation in key decision.
2) Ensure transparent selection & adequate autonomy of independent directors.
3) Empower audit committee to reduce fraudulent of finance
4) Strengthen SEBI monitoring & impose penalty for violation
5) Encourage diversity of expertise, into board members
Suggestions to improve:
- Could reference specific regulatory measures like mandatory rotation of auditors every 5 years and whistleblower protection mechanisms.
- Can mention board evaluation frameworks and risk management committees as governance strengthening tools.
What you wrote:
Good corporate governance is not only obligation of regulation but a foundation of sustainable economic growth. Strengthen board independence, transparency, accountability help Indian companies to build trust among stakeholders and contribute to Vikshit Bharat by 2047 through responsible & inclusive corporate growth.
Good corporate governance is not only obligation of regulation but a foundation of sustainable economic growth. Strengthen board independence, transparency, accountability help Indian companies to build trust among stakeholders and contribute to Vikshit Bharat by 2047 through responsible & inclusive corporate growth.
Suggestions to improve:
- Could highlight recent digital governance initiatives (e.g., e-voting platforms enabling remote shareholder participation during COVID-19, improving corporate democracy).
Your answer systematically addresses both demands with good structure and relevant examples. The flowchart adds visual appeal, though one factual error about Tata Sons needs correction. Strong conclusion linking governance to national goals.
Demand of the Question
- Why good corporate governance is important for Indian companies
- What major challenges stop company boards from governing effectively
What you wrote:
Corporate Governance refers to the system of rules, process & practice through which corporates are directed, controlled & regulated.
In India, Companies Act of 2013, & SEBI LODR Regulation, provides institutional for corporate governance.
Corporate Governance refers to the system of rules, process & practice through which corporates are directed, controlled & regulated.
In India, Companies Act of 2013, & SEBI LODR Regulation, provides institutional for corporate governance.
Suggestions to improve:
- Could strengthen by adding context about India's corporate landscape (e.g., family-owned businesses dominating 60% of listed companies, making governance reforms crucial for investor confidence).
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