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corporate governance





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By : DR.VEDULA GOPINATH
On : 07 May 2012

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Backdrop:
 
Corporates now face mounting pressure to demonstrate legal compliance, regulatory compliance and high standards of corporate governance. Corporate Governance is a strategy for which legal compliance is an operational plan of action. Legal Compliance Management is the cornerstone of good corporate governance4. “Core to good corporate governance is compliance with the laws of the land.
 
Effective compliance helps the company avoid costly fines due to breaches in regulations.
 
The legal and regulatory framework governing corporate sector is undergoing a major transformation following sustained policy reforms in various segments of industrial, financial, corporate, trade, investment and related sectors.
 
India has witnessed a series of legal and regulatory reforms in various sectors in the last decades. The new initiatives in modern legal and regulatory systems are significant components in new business environment due to emergence of liberlisation, privatisation and globalisation (LPG).
 
Consequence of noncompliance of laws
 
Many corporates in general perceive corporate compliance, substantive and procedural, as a mundane activity involving costs without any tangible benefits. What they fail to realize is that the cost of non- compliance is also huge which may result in cancellation of business licenses, huge fines or even jail terms, which could cripple a company. 
 
 
 
Necessity of legal audit
 
Under this background, a periodic review of legal compliances and legal matters by a competent legal professional shall give relief, cover and assurance to the C.E.O. and/or director that they are on the right side of the law. This process ensures to prevent any acts of omission or commission. Also an opportunity shall be provided for remedial and preventing action. Also the tendency to continue undesirable litigation can be sorted out and settled by way of arbitration or out-of-court settlements.
 

 

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