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01-10-2010, 04:30 PM #1
Corporate governance cannot be mandated: Irani
Tata Sons Ltd Director Jamshed Irani has said that corporate governance is a culture that cannot be mandated, but has to be built up gradually with strong link between the board and the management of the company.
Delivering a lecture on ''Corporate governance through the lens of an Indian corporate'' here last night, Mr Irani said corporate governance has become a major cause of concern following the Satyam scam. He believes that frequency of financial reporting is not so important, but accuracy and efficiency of the same is more crucial to ensure quality governance.
Asserting that with change in business environment ''we should also change the way we look at the governance and also our mindset,'' Mr Irani said corporate governance and financial governance are two main parts of the governance.
As far as corporate governance is concerned, he said, provisions like clause 49 can make some difference, but if the Chief Executive Officer or Chief Financial Officer is determined to do something wrong, no one can stop him.
He said the new Company Law, having provisions in line with international practice, is expected to encourage entrepreneurship.
''But when it comes to punishment, certainty is more crucial than its severity. Hopefully, the new law will also bring in transparency and proper disclosure norms, which will ultimately lead to desired accountability in the entire system,'' he said.
Commenting on Corporate Social Responsibility, he said CSR is not an expense, but an investment which pays in the long run.
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