Published On: November 10th 2025
Authored By: Shravani Vishnu
Reva University
Abstract
Corporate governance in India has been a subject of growing debate and steady reform. The introduction of the Companies Act, 20131, along with several rounds of regulatory measures by the Securities and Exchange Board of India (SEBI)2, aimed to bring in more transparency, accountability, and fairness to the way companies operate. These changes were meant to strengthen shareholder protection, tighten disclosure rules, and align Indian practices with international expectations. Yet, in many cases, governance has been treated as a checklist exercise rather than a genuine commitment to ethical management.
This article looks at whether corporate governance in India has truly evolved as a core legal and economic necessity or if it has mostly been a response to scandals, crises, and global investor pressure. It traces how governance norms developed over time, how courts and regulators have stepped in3, and how global best practices have influenced reforms4. The discussion also reflects on the tension between written law and ground realities, showing how political priorities, institutional capacity, and social demands continue to shape the future of corporate governance in India.
Introduction
Corporate governance refers to the framework of rules, practices, and processes by which companies are directed and controlled5. It is a system that balances the interests of a company’s stakeholders, and also about how companies are managed, how decisions are made, and how responsibly they treat their investors, employees, and the larger public including shareholders, management, employees, customers, financiers, government, and society at large. In India, the need for corporate governance has gained prominence especially after the liberalisation of the economy in 19916, which opened Indian markets to global investors and heightened the importance of transparency and accountability. In India, this area of governance has gone through a wave of changes in recent years. New laws have evolved with stricter regulations that have been made to make boards more accountable, improve transparency, and protect minority shareholders. At the same time, Indian regulators are trying to bring local practices closer to global standards. for independent directors, audit committees, and better financial disclosures. Scandals like the Satyam fraud in 2009 .
Corporate scandals such as the Satyam Computers scam (2009) highlighted the weaknesses in governance structures and pushed for stronger legal and regulatory reforms7. Today, corporate governance in India is not only a matter of compliance but also an essential requirement for sustainable growth, investor confidence, and alignment with global standards8.
Historical Context of Corporate Governance In India
India’s regulatory landscape has undergone significant changes in recent years, with a focus on promoting transparency, accountability, and investor protection9. The country’s corporate governance requirements are designed to ensure that companies operate in a fair, transparent, and responsible manner
Corporate governance in India has changed a lot over time. In the earlier years, most companies were family-owned, and decisions usually favoured promoters rather than protecting smaller shareholders10. The Companies Act of 195611 set some basic rules, but in practice, transparency and accountability were limited because enforcement was weak.
Things started shifting after the 1991 economic reforms, when India opened up to global markets12. With foreign investment and tougher competition, there was pressure to improve governance standards. Industry bodies and committees such as the CII Code of 199813 and the Kumar Mangalam Birla Committee (1999)14 were among the first steps in setting clearer rules highlighted how fragile the system was, forcing regulators to take stricter action.
The Companies Act, 2013 marked a turning point. It introduced provisions like mandatory CSR spending15, appointing women directors on boards16, stronger audit committees17, and whistleblower policies18. Later, SEBI’s Listing Regulations (2015)19 and the Kotak Committee reforms (2017)20 further pushed for board diversity, accountability, and more independence in decision-making.
Today, corporate governance in India is moving towards global practices, with more focus on ESG (Environmental, Social, and Governance)21, integrated reporting22, and digital tools for compliance. Still, challenges remain in consistent enforcement23, the role of independent directors24, and changing the corporate culture to embrace ethics and transparency in the true sense25.
Regulatory Framework:
The system relies on laws and guidelines, such as the Companies Act, 201326, and SEBI’S corporate governance guidelines27, to set standards for company operations along with MCA(Ministry of Corporate Governance) which oversees corporate governance, company law administration, and investor protection.Few other include:
- Standard Listing Agreement of Stock Exchanges: This agreement applies to those businesses that are listed on any stock exchange in India. Their purpose is to ensure continuous disclosures so that the market can be transparent28.
- Accounting Standards by Institute of Chartered Accountants of India (ICAI): ICAI has set these standards to see that financial reporting is done accurately and uniformly, thus maintaining integrity in financial statements and in showing an entity’s financial position29.
- Indian Accounting Standards (Companies – Indian Accounting Standards) Rules: These rules say that Indian companies must follow International Financial Reporting Standards or IFRS. IFRS helps make financial statements clear and easy to compare30.
- Secretarial standards: These were put forward by ICSI (Institute of Company Secretaries of India). They govern how board meetings should be conducted along with general meetings, thereby enhancing good practice in corporate affairs while ensuring adherence to laws31.
Under ,
(a) Companies Act, 2013
The Companies Act, 2013, is the cornerstone of Indian corporate governance. Some key provisions include:
Independent Directors (s. 149): Certain companies must appoint at least one-third independent directors to ensure impartiality.
Duties of Directors (s. 166): Directors must act in good faith, promote the interests of stakeholders, and exercise due diligence.
Audit Committees (s. 177): To oversee financial reporting and internal controls.
Nomination and Remuneration Committees (s. 178): To ensure fair appointment and pay policies.
Corporate Social Responsibility (s. 135): Mandates companies meeting certain thresholds to spend at least 2% of profits on CSR32.
(b) SEBI (LODR) Regulations, 2015
The Securities and Exchange Board of India (SEBI) regulates listed companies through the Listing Obligations and Disclosure Requirements (LODR) Regulations. These norms ensure timely disclosures, board independence, and transparency in related-party transactions33.
(c) Corporate Governance Voluntary Guidelines, 2009
These guidelines issued by the Ministry of Corporate Affairs encouraged best practices in board composition, remuneration, and stakeholder relations34.
(d) Kotak Committee Report, 2017–18
This committee proposed significant reforms, such as strengthening the role of independent directors, enhancing disclosure norms, and improving transparency in promoter-led companies. SEBI implemented several recommendations, strengthening the Indian governance framework35.
Judicial Approach to Corporate Governance
Indian courts have also played a significant role in strengthening governance:
- SEBI Sahara India Real Estate Corp. Ltd. (2012) 10 SCC 603 – The Supreme Court held Sahara liable for raising funds illegally from investors, reinforcing investor protection.
- Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd. (2021) 9 SCC 449 – Highlighted the importance of minority shareholder rights and independence of board
- Union of India v. Reliance Industries Ltd. (2018) SCC OnLine SC 380 – Emphasised corporate accountability in large contractual arrangements36.
These cases underscore the judiciary’s role in interpreting governance norms in favour of fairness, accountability, and transparency.
Contemporary Issues in Indian Corporate Governance
Despite reforms, challenges remain:
- Promoter Dominance: Many Indian companies are promoter-driven, raising concerns about minority shareholder rights.
- CSR Implementation: Companies often treat CSR as a compliance formality rather than a tool for social impact.
- Related-Party Transactions: Abuse of insider positions continues to be a challenge despite SEBI oversight.
- Board Diversity: Women and independent experts remain underrepresented on boards.
- ESG and Sustainability: Environmental, Social, and Governance (ESG) disclosures are still evolving.
- Digitalisation Challenges: Issues such as cybersecurity, data protection, and AI in governance pose new risks.
Comparative Perspective: Global Best Practices
A comparative analysis highlights where India stands in relation to international standards:
- UK Corporate Governance Code (2018): Based on the “comply or explain” principle, requiring companies to either comply or justify deviations. Focuses on board effectiveness and shareholder engagement37.
- US Sarbanes-Oxley Act (2002): Introduced after the Enron scandal, it imposes strict compliance, auditor independence, and CEO/CFO liability for financial reporting38.
- OECD Principles of Corporate Governance (2015)39: Provide a global benchmark, stressing shareholder rights, equitable treatment, transparency, and accountability.
India has incorporated elements from these models but still struggles with effective enforcement compared to developed jurisdictions.
Policy Recommendations
To strengthen corporate governance in India, the following measures are suggested:
- Stronger Enforcement by SEBI: Penalties for non-compliance should be stricter to ensure real accountability40.
- Promoter Independence: Greater checks on promoter influence, including enhanced minority shareholder protections
- Board Diversity: Mandatory gender and skill-based diversity to ensure more balanced decision-making.
- Strengthening CSR: Linking CSR projects with sustainable development goals (SDGs) to increase impact.
- Digital Governance Framework: Regulations addressing AI, cybersecurity, and data protection at the board level.
- Mandatory ESG Reporting: Indian companies should adopt globally aligned ESG standards to attract foreign investors41.
Conclusion
Corporate governance in India has come a long way since liberalisation. The legal framework under the Companies Act, 201342, and SEBI regulations provide a strong foundation. However, the real challenge lies in implementation and enforcement. Indian companies must not only comply with the law but also embrace governance as a culture of accountability and transparency.
By learning from global best practices and strengthening domestic enforcement, India can build a robust corporate governance regime that supports investor confidence, sustainable growth, and global competitiveness.
References
1 Companies Act 2013 (India).
2 Securities and Exchange Board of India Act 1992 (India)
3 Tata Consultancy Services v Cyrus Investments Pvt Ltd (2021) 9 SCC 449 (SC).
4 OECD, Principles of Corporate Governance (2015).
5 Cadbury Committee, Report of the Committee on the Financial Aspects of Corporate Governance (London, 1992).
6 Government of India, Economic Reforms: Two Years After and the Tasks Ahead (Ministry of Finance, 1993).
7 In re Satyam Computer Services Ltd (2009) SEBI Order, Case No. WTM/PS/15/IVD/09/2018.
8 OECD, Principles of Corporate Governance (2015).
9 Securities and Exchange Board of India Act 1992 (India)Securities and Exchange Board of India Act 1992 (India)
10 A Chatterjee, Corporate Governance in India: Change and Continuity (Oxford University Press 2021).
11 Companies Act 1956 (India).
12 Government of India, Economic Reforms: Two Years After and the Tasks Ahead (Ministry of Finance, 1993).
13 Confederation of Indian Industry, Desirable Corporate Governance Code (1998).
14 Ministry of Corporate Affairs, Report of the Kumar Mangalam Birla Committee on Corporate Governance (1999).
15 Companies Act 2013, s 135.
16 ibid, s 149(1).
17 ibid, s 177.
18 ibid, s 177(9).
19 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
20 Ministry of Corporate Affairs, Report of the Committee on Corporate Governance (Uday Kotak Committee, 2017).
21 SEBI, Business Responsibility and Sustainability Reporting Framework (2021).
22 International Integrated Reporting Council, International <IR> Framework (2021).
23 Tata Consultancy Services v Cyrus Investments Pvt Ltd (2021) 9 SCC 449 (SC).
24 Needle Industries (India) Ltd v Needle Industries Newey (India) Holdings Ltd (1981) 3 SCC 333 (SC).
25 Ministry of Corporate Affairs, Report of the Committee on Corporate Governance (Narayan Murthy Committee, 2003).
26Companies Act 2013 (India)
27 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
28 Standard Listing Agreement of Stock Exchanges (India).
29Institute of Chartered Accountants of India, Accounting Standards.
30 Companies (Indian Accounting Standards) Rules 2015.
31 Institute of Company Secretaries of India, Secretarial Standards.
32 Institute of Company Secretaries of India, Secretarial Standards.
33 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
34 Ministry of Corporate Affairs, Corporate Governance Voluntary Guidelines (2009).
35 SEBI, Report of the Committee on Corporate Governance (Uday Kotak Committee, 2017).
36 SEBI v Sahara India Real Estate Corp Ltd (2012) 10 SCC 603; Tata Consultancy Services Ltd v Cyrus Investments Pvt Ltd (2021) 9 SCC 449; Union of India v Reliance Industries Ltd (2018) SCC OnLine SC 380.
37 UK Corporate Governance Code 2018 (Financial Reporting Council, UK).
38 US Sarbanes-Oxley Act 2002, Pub L No 107–204, 116 Stat 745.
39 OECD, Principles of Corporate Governance (2015).
40 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
41 SEBI, Business Responsibility and Sustainability Reporting Framework (2021).
42 Companies Act 2013 (India).
