Mumbai, July 22 (ANI): Advocating the need for robustness in corporate governance, former CII president and Godrej Group chairman Adi Godrej has said that organisations need to be principle-based and not rule based because principles are harder to get around than rules.
Addressing the launch session of the CII Governance Series 2015-16, he said, “The need of the hour is not more rules but effective enforcement of the laws. Legislation alone is not a panacea to good corporate governance.”
Laying stress on the overall wellbeing of the company, he advised against pursuit of endless profit.
“Promoters should desist from actions that are only in their interest and not in the interest of the company,” Godrej said.
He enforced that corporate governance tends to be confused as protection of minority stakeholders; whereas in reality it should promote the long term good of the company. He enumerated how all stake holders should be considered equal from a corporate governance point of view.
Enforcing the need for a balanced Board view in governance, he said that it is very important to get broad-ranging suggestions, including points of view that are different since dissenting views were also likely to be good for the company.
Godrej also explained the need to encourage whistle blowers, saying they could be good for a company in the long term.
Speaking on the benefits of corporate governance, he asserted how good governance, being the responsibility and privilege of each and every stakeholder of the company, benefits it by way of providing competitive advantage in the global market, helping raise capital widely, easily and cheaply, leading to good employee morale with high productivity.
Talking about the challenges, Godrej shared how managements are at times faced with many dilemmas given how they have to balance short, medium and long term goals and interests of the company.
He felt the best management is that which take a reasonably long term view of things.
Setting the tone, Pradeep Lankapalli, Managing Director India and Global Head of Operations Centers, Thomson Reuters said, “In the current economic environment, governance is not just a compliance mechanism, it is also an enabler for good corporate performance. Research has shown that there is a direct correlation between good governance and improved financial performance.”
Delivering the Introductory remarks, Sanjay Nayar, CEO, KKR India Advisors Private Limited, asserted the criticality for adopting best practices in corporate governance for Indian companies to compete for capital and talent globally.
Anthony Crasto, Partner – Governance Risk and Compliance Services, KPMG India, wrapped up the session by acknowledging how in the long term, shareholders are ready to pay extra premium for good corporate governance, without which companies run the risk of perishing.
To discuss the latest trends on corporate governance and the concerning issues, CII has been organizing CII Governance Series, a series of breakfast meetings launched in 2005.
The CII Governance Series is aimed at facilitating the dissemination of changing trends of corporate governance by way of holding interactive sessions with CEOs focusing on governance, accountability, compliance and trust – fostering a culture of good governance and building corporations of the future. (ANI)