“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