“You can’t do right in one department, whilst attempting to do wrong in the other department. Life is one indivisible whole.”- This was a Statement of Mahatma Gandhi. The very concept of Corporate Governance is revolving around this Statement.
While experiencing his life with the struggle of Independence of
India, Mahatma Gandhi had drawn up several doctrines. One of the Beautiful Doctrine was Seven
Social evils of which a few are relevant in the Today’s business context. Those were Business without ethics, Power
without accountability and Wealth without work.
Wealth without work- a practice of getting something from nothing- gaining by manipulating the market without any value addition.
Business without ethics- Doing business without having regard to the interest of stakeholders and not complying the laws neither with spirit nor with letter.
Power without Accountability- conferred with a lot of power but not accountable to the Subordinates.
The Whole idea of Corporate form of Business is based on the Gandhian
principle of Trusteeship, which is inherited from the principles of Gita,
“aparighraha”- (non-possession). Here
The Business and the Company is something different from the Promoters/
Directors/ Managers. They are in the position of Trustees, being the custodians
of the Property of The Shareholders.
The concept of governance has assumed importance in the corporate
entity of business, principally because in corporate entity, there is a divorce
between capital & management. Those who provide the funds & those who
manage the fund in a corporate entity are not necessarily the same people. The
fund providers always want to be assured that the funds provided by them are
safe & growing & that they are capable of taking informed decisions.
This assurance is provided through the mechanism of corporate governance
embodied in functioning of corporate form of business enterprise. Thus, one can
conclude that corporate governance referred to as system of regulating
controlling & directing the affairs of corporate form of business
enterprise in such a way so as to best serve the interest of all the
stakeholders. Corporate Governance is concerned with the establishment of a
system whereby the Directors are entrusted with responsibilities & duties
in relation to the direction of corporate affairs. It is concerned with morals, ethics, values &
parameters of conduct & behavior of the company & its management. The concept of corporate governance has two
hinges-
(1) Protection & enhancement of
corporate wealth.
(2) Complete transparency, integrity
&accountability of the management, with an increasingly greater focus on
investor protection
Most of the Corporate Citizens in India never realized the law of Corporate Governance as a matter of Intense practicality, that this is a principle which is capable of helping us to create wealth not only for us but also for the Millions of people, who are living the life of poverty. If we had done so, we would not have had the satyam scam, stock exchange scam, Chit fund scam etc.
Conclusion
The Idea of Corporate Governance should be understood in true spirit
by the custodians of Investor’s wealth. They should understand their position
as Trustees rather the Owners of Other’s Wealth. Unless the model of Corporate
Governance becomes a way of life by both preaching & acting in a realistic
manner, the Law of Corporate Governance would remain in the Law Books or for some
ritualistic Compliance.
“Good People do not need
laws to tell them to act responsibly, while bad people will find a way around
the laws.” - Plato
Jyotirmaya Panigrahi
