Corporate Governance – A Part of Corporate Strategy, This article is basically about the corporate governance provisions under the Companies Act, 2013. Corporate Governance normally means the ties between the owners and the employees of the company which would say about the growth of the company as a whole. The working of the company as all the stakeholders think or desire the company should work is referred as corporate governance. More details about the same would be discussed in the below article. Now you can scroll down below n Check more details regarding Corporate Governance – A Part of Corporate Strategy.

Meaning of Corporate Governance:

Corporate Governance is a method through which the company is managed and planned for the working. It would matter about the goals of the company as an institution as a whole and the societal goals on the other end. Corporate Governance would lead to the effective strategy being implemented in a proper way. This Governance would give all the responsibility to the Board of Directors and make them do the work in accordance with the objectives of the company. The need of the corporate governance has been arisen due to the change in the market trends from the simple and not a competitive market to full of competition which would lead to more of strategies in a proper manner with following the norms and regulations of the company.

Provisions under Companies Act, 2013

  • The first and the foremost initiative of this is inclusion of compulsory at least 1 women director under Section 149 of the Companies Act, 2013. But there are some conditions attached to it. This provisions are compulsory only in two circumstances. One when the company is listed company, and the other non-listed public companies having 300 crores of turnover or 100 crore or more of share capital.
  • There has been revisions in the limits of the Audit committee requirements in the new act. The Audit Committee should be worked under the responsibility of Chairperson who should be having the knowledge of the finance and have the understandings in the terms of the financial statements. The conditions attached are the non-listed public companies having paid up capital of 10 crores or more, turnover of 100 crore or more, or loan exceeding or equal to 50 crores.
  1. The most important part which has been regarded in the industry is the strategy of corporate social responsibility which has been very much trending in the market because of the stringent provisions under the act. Under Section 135, the provision of the new social corporate responsibility committee. The conditions attached for the formation of the committee was 500 crores or more of net worth, net profit of 5 crores or more, turnover of 1000 crores or more.
  • The minimum number of independent directors for public companies having turnover of 100 crores or more, should have at least 2 directors, and the public companies having paid up capital of 10 crores or more should also have at least 2 directors.
  • Under Section 138, provisions have been made compulsory for the internal auditor to be appointed compulsorily. The conditions attached are non-listed companies having paid up share capital of 50 crores or more, loans of 100 crores or more, and turnover of 200 crores or more.
  • The initiatives by MCA for the Green Initiative in Corporate Governance by agreeing with the compliances and the notices through the electronic mode has been very much praised step towards modern corporate governance.
  • The number of board meetings, code of conducts, Independent Audit committee, disclosures with the transactions with the related parties, size of the board and many other strategies play an important role in the reputation of the company.

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