Introduction
“Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.” — Sir Adrian Cadbury, UK Commission Report on Corporate Governance (1992) Over three decades have passed since these words were written, yet their relevance today is more striking than ever. As the corporate world evolves in response to growing stakeholder expectations, regulatory scrutiny, and global sustainability challenges, corporate governance has emerged as the backbone of responsible business conduct. The word governance comes from the Latin word “gubanare” which means “to steer”. In simple words ‘governance’ means “the manner of directing and controlling the actions and affairs”. The Ministry of Corporate Affairs and Securities and Exchange Board of India, are predominantly involved in guiding the Corporate Governance initiatives in India.
A BRIEF HISTORY ON CORPORATE GOVERNANCE
Before liberalization, Indian companies were often family-run with limited transparency, low shareholder activism, and weak investor protections. Governance was informal and internal, with little accountability to public stakeholders. With the 1991 economic reforms, India opened to foreign investments. This required stronger financial systems and global investor confidence, which became the trigger for governance reforms.
Corporate governance in India has evolved significantly over the past few decades. From the promoter-driven models of the pre-liberalization era, reforms began with the 1998 CII voluntary code and gained momentum with SEBI’s introduction of Clause 49 after the Birla Committee. The Satyam scandal in 2009 exposed the urgent need for stronger frameworks, leading to the transformative Companies Act, 2013. Further refinements came through the Kotak Committee recommendations in 2017, while recent years have seen governance expand to include ESG, digital accountability, and stakeholder-centric policies — marking a shift from mere compliance to responsible, transparent, and ethical leadership.
COMPLIANCE TO CULTURE: THE EVOLUTION OF GOOD GOVERNANCE
- Good corporate governance leads to increased access to capital, improved operational performance, reduced risk of financial crises, and enhanced relationships with stakeholders.
- Key principles include accountability, fairness, transparency and responsibility ensuring that the interest of all stakeholders are considered
- Companies are also required to constitute various committees are required under the different regulations to look into specific areas of governance.
- SEBI has introduced the Business Responsibility and Sustainability Reporting (BRSR) to enhance ESG (Environmental, Social, and Governance) disclosures, with BRSR Core focusing on key performance indicators. Integrated reporting, which combines financial, social, and environmental information, is gaining traction.
- Effective corporate governance practices help mitigate various business risks, including financial, legal, and reputational risks.
In essence, corporate governance in India is moving towards a more holistic, value-driven approach, where transparency, sustainability, and stakeholder engagement are key drivers of success. Companies are moving beyond mere compliance to embrace ethical leadership and long-term value creation. This includes a greater emphasis on integrated reporting, diversity in board composition, and the integration of environmental, social, and governance (ESG) factors and even enhanced whistle blower mechanisms. ESAF Small Finance Bank in Kerala has recently been in the spotlight for its good governance and ethical initiatives. This example shows us how deep the concept of corporate governance has penetrated trickling down to even local levels. A few noteworthy initiatives include:
- Strong Board Composition & Governance Structure
As of March 2024, ESAF Bank’s board includes six independent directors, one of whom is a woman, along with nominee and executive directors. This board mix complies with the Companies Act, RBI regulations, and SEBI norms, ensuring diverse expertise, independence, and robust oversight.
2. Transparency, Risk Management & Ethics Leadership
ESAF outlines transparency, integrity, and accountability as core governance principles. Its governance architecture features independent compliance, internal audit, and risk management functions—supported by multi-layered governance committees and a dedicated Chief Compliance Officer.
3. Sustainability & ESG Practices
The bank integrates ESG and Triple Bottom Line thinking into its operations. Through its Sustainable Banking Department, ESAF drives environment- and community-focused programs, reflecting a governance-focused CSR ethos.
4. Community Governance & Financial Inclusion
ESAF regularly partners with institutions like NABARD and IIM Kozhikode to deliver financial literacy, eco-friendly development, and skill-building programs across Kerala—aligning its banking approach with good governance and social responsibility.
5. Board’s Strategic Oversight in Financial Decisions
In June 2025, its board approved the strategic disposal of ₹735 crore in non-performing loans to an asset reconstruction company. The decisive move led to an 11% stock price surge, reflecting investor confidence in ESAF’s governance-led financial correction.
With the growing emphasis on corporate governance on one side, weak corporate governance teaches us how businesses collapse however great their potential. In early April of this year Gensol Engineering has been in the news for corporate governance collapse. The key areas of corporate governance failures included promoter-led fund diversion, misleading disclosures, misuse of public loans — resulting in regulator bans, investigations, and stock collapse. Byjus has been a common example sited when thought of governance failures. Lack of board independence, auditor resignations over ethics, IBC litigation alleging fraudulent transactions, and controversial financial structuring were some of the reasons noteworthy of mentioning when talking about Byjus which once revolutionized the concept of digital learning and classrooms and clarity focussed conceptual learning.
EMPHASIS OF NEW MCA REGULATIONS ON CORPORATE GOVERNANCE
- The Board’s Report must now include the status of sexual harassment complaints, compliance with Maternity Benefit Act, reporting on CSR implementation linked with CSR-2 pushing companies toward greater transparency, accountability, and social responsibility, all pillars of corporate governance.
- Form ADT-4 now mandates reporting of frauds ≥ ₹1 crore through the MCA portal, instead of just physical mail to the Central Government. This makes fraud oversight faster, traceable, and auditable—a strong governance measure to prevent cover-ups and ensure timely regulatory intervention.
- Cost Audit disclosures(CRA-2 and CRA-4) now include AGM extension reasons, SRN tracking of delayed filings, declaration that the auditor is the lead auditor for multiple companies thus promoting objectivity, independence of auditors, and prevents conflict of interest—key aspects of corporate governance.
The above are some of the noteworthy changes brought in by MCA recently. The very shift to MCA21 V3 for all filings aims to reduce paper based corruptions, enable real time oversight, allow cross checking of company disclosures. This systemic change supports digital governance and transparency, aligned with global ESG and governance trends.
CS & CORPORATE GOVERNANCE: A PARTNERSHIP OF ACCOUNTABILITY
The Institute of Company Secretaries of India has brought in various initiatives ranging from conferences, recognitions for companies for good governance to the recent ESG and Sustainability initiative undertaken in regards to the app “Meri Life” which is a digital platform for individuals and communities to pledge to protect and preserve the environment and the recent National Sustainability Conference 2025 on the topic ”Fostering Sustainability towards a Resilient future”.
The role of Company Secretaries in this stringent era of Corporate Governance is branching in all directions from being a Compliance officer to a Strategic Governance anchor and a custodian of corporate integrity and transparency. In today’s corporate world, where governance is not optional but expected, a Company Secretary is indispensable. They are the backbone of ethical and legal functioning—a true guardian of corporate integrity. Even MCA’s July 2025 reforms have reshaped the Company Secretary’s role into a guardian of governance, a compliance strategist, and a catalyst for ethical corporate conduct. As the corporate landscape shifts toward transparency and accountability, the CS is no longer at the periphery—they are at the heart of responsible business. Corporate governance today is not just about law—it’s about ethics, sustainability, and stakeholder trust. This makes the CS a central figure in risk management, and more importantly, a watchdog within the company. The Board of a company depends on the Company Secretary to flag governance risks and interpret legal changes thus making her the Strategic Advisor to the Board especially in family-run or promoter-driven companies, the CS ensures independent governance practices are upheld. The Company Secretary of the future will not just ensure the company does things right—they’ll ensure the company does the right thing. Their role in corporate governance will grow from enforcing rules to shaping corporate conscience.
CORPORATE GOVERNANCE BEYOND BUSINESS
Good governance, traditionally associated with the principles guiding organisations and governments, is not merely a set of rules but can be embraced as a lifestyle. Beyond the boardroom and political arena, the values of transparency, accountability, and fairness can be woven into the fabric of our daily lives. Good governance has a transformative impact on personal and societal well-being.
Transparency in Personal Choices: Living a transparent life involves being honest with oneself and others, acknowledging strengths and weaknesses, and making choices that align with one’s values. This transparency fosters trust in personal relationships and cultivates an environment of openness.
Accountability for Personal Growth: Adopting accountability as a lifestyle means taking ownership of one’s actions and decisions, individuals committed to this principle actively seek opportunities for personal growth, learning, and improvement.
Inclusivity in Interpersonal Relationships: Similarly, in our personal lives, embracing inclusivity involves respecting and valuing the diversity of thought, background, and experiences in our relationships. This fosters an environment of mutual understanding and enriches our perspectives.
Fairness in Personal and Professional Endeavors: As a lifestyle choice, fairness can be incorporated into personal and professional interactions. Treating others justly, irrespective of differences, promotes harmony and collaboration, contributing to a more balanced and fulfilling life.
Sustainability in Lifestyle Choices: Sustainable development is a core principle in governance. On a personal level, adopting sustainable practices in lifestyle choices, such as mindful consumption and environmental consciousness, contributes to a healthier planet and a more responsible global citizen.
Ethical Decision-Making as a Guiding Principle: Similarly, individuals can make ethical decision-making a guiding principle in their lives. Upholding integrity, honesty, and moral values ensures that personal actions align with broader ethical standards, contributing to a sense of purpose and fulfilment.
Continuous Learning and Adaptability: In governance, adaptability to change is crucial for success. As a lifestyle, embracing continuous learning and adaptability enables personal growth. Remaining open to new ideas, seeking knowledge, and adapting to evolving circumstances create a foundation for resilience and success.
Conclusion
“Governance and leadership are the yin and the yang of successful organisations. If you have leadership without governance you risk tyranny, fraud and personal fiefdoms. If you have governance without leadership you risk atrophy, bureaucracy and indifference.” – Mark Goyder (Director of Tomorrow’s Company). This quote perfectly sums up why governance is such an emphasised concept in today’s world and what the absence of corporate governance can lead to.