Corporate Governance in India A Critical Analysis of Evolution and Enforcement Challenges

Dr. Diwas Kant Samadhiya

Corporate Governance, Regulatory Reforms, Enforcement Challenges, Companies Act 2013, SEBI Regulations, Board Independence, Minority Shareholder Protection, Promoter Dominance.

Corporate governance in India has undergone significant transformation over the past three decades, particularly in the wake of economic liberalization initiated in 1991. The shift from a state-controlled economic model to a market-oriented framework increased the role of private corporations and capital markets, thereby intensifying the need for robust governance mechanisms. This study critically examines the evolution of corporate governance in India and analyzes the persistent enforcement challenges that continue to affect its effectiveness. Corporate governance broadly refers to the system of rules, practices, and institutional mechanisms through which companies are directed, controlled, and held accountable to stakeholders. It aims to ensure transparency, accountability, fairness, and ethical conduct in corporate management. The evolution of corporate governance in India can be traced from the regulatory structure of the Companies Act, 1956 to a more comprehensive framework under the Companies Act, 2013. Important milestones include the introduction of Clause 49 of the Listing Agreement by the Securities and Exchange Board of India (SEBI), the recommendations of various expert committees such as the Kumar Mangalam Birla Committee and the Narayana Murthy Committee, and the strengthening of disclosure norms and board responsibilities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations. Despite notable progress in regulatory reform, enforcement remains a significant challenge. The dominance of promoter-led and family-owned firms in India creates structural constraints on board independence and minority shareholder protection. While formal compliance requirements have increased, substantive accountability often remains limited due to regulatory capacity constraints, procedural delays, and governance practices that prioritize control over transparency. Issues such as related-party transactions, insufficient whistleblower protection, limited gender diversity on corporate boards, and inadequate implementation of corporate social responsibility (CSR) obligations highlight gaps between law and practice. The study also evaluates the growing influence of institutional investors, global capital flows, and environmental, social, and governance (ESG) standards in reshaping governance expectations. Increasing integration with global financial markets has compelled Indian corporations to align with international best practices, yet enforcement mechanisms must evolve to ensure credibility and investor confidence. The analysis underscores that effective corporate governance depends not only on statutory provisions but also on ethical corporate culture, independent regulatory institutions, professional board leadership, and active stakeholder participation.

Volume 3 Issue 3, July-2015

Pages : 563-577