Companies Bill 2012– Giving Voice to Minority Investors in India

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The passing of The Companies Bill 2012 by Rajya Sabha on 8th August 2013,  is a step forward towards transformation in the corporate governance practices of the country. The new bill that requires President’s assent for it to become law, replaces the Companies Act of 1956. The bill, when enacted will bring in reforms to enhance corporate governance by giving voice to the minority investors in India, strengthening the role of independent directors and expanding the responsibility on auditors.

A key objective of corporate governance in India has been to strike a balance between the rule of majority shareholders and the protection of the rights of minority shareholders. The protection of minority shareholders rights is particularly critical given the often concentrated ownership of Indian companies.

Unlike in the developed countries such as US & UK, where ownership of a company is widely dispersed and is generally separate from the management of the company. In India, listed companies are usually parts of a large business group, characterized by a promoter or a controlling shareholder.

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Norms and Stereotypes in Corporate India

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India is fast emerging as an innovation base and presents a large market opportunity to companies that are creating economical products and solutions for the country. At the same time, India also has its share of challenges in terms of lack of adequate infrastructure, bureaucratic bottlenecks, complex labor and taxation regulations etc. But besides these major policy or investment constraints, there are these few other norms & stereotypes typical of the Indian corporate culture, which though are commonplace for most of us living in India, but if changed will work towards projecting a much better image of Indian businesses.

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