During an ideating discussion on ‘Value Creation through Corporate Governance’, hosted by IIMB’s CCGC, former SEBI Chairman discusses the essence of corporate governance, its objective, how to evaluate it and maximize its value
31 July, 2017, Bengaluru: “Corporate Governance is all about wealth creation, wealth management and wealth sharing – it is a philosophy of business”, said guest speaker G.N. Bajpai discussing the evolution of Corporate Governance, during a talk on ‘Value Creation through Corporate Governance’, hosted by the Centre for Corporate Governance and Citizenship (CCGC) at Indian Institute of Management Bangalore (IIMB), as part of its Leaderspeak Series, on July 31 (Monday), 2017.
G.N. Bajpai, who is the former Chairman of SEBI, as well as former Chairman of LIC, is the winner of the Prime Minister’s award for 'Outstanding Contribution to the Development of Finance’ and is on the Board of several corporations. The distinguished business leader went on to say that Corporate Governance is a term used more than any other in the corporate world, but “the real philosophy is lost in the din of the regulatory framework, legislative provisions and endless debates”.
He pointed out that the barrier to good corporate governance is varying interests of different stakeholders, which leads to abuse of authority and opportunity. That is how regulation came in to the picture and formation of legislation to ensure that the obstacles do not hinder good corporate governance.
“The framework of Corporate Governance rests on four pillars – related party transactions, following of the accounting standard, disclosure/transparency and boardroom practices. This is the broad framework. However, refinement remains a concern. Because of the variety and enormity of the framework, Corporate Governance is often confused with the observance of the framework alone.”
He further explained, “Resources of planet earth are limited, hence they need to be utilized optimally. There should be appraisal and rating of Corporate Governance as well. There are people from diverse backgrounds in the Board. Executive management should utilize this talent on board and there should be a Board agenda for the same.”
To optimize effectiveness, he suggested the right balance of youth (for risk-taking) and maturity (for a sense of proportion). “This combination will ensure superior decision-making in the Boardroom.”
Role defining is crucial, he observed. “The role of the board is to define the direction, strategy, and goal of value creation of the company. Executive management has to do the background work, suggest possible alternatives and execute strategies defined by the board to deliver the vision of value creation.”
His recommended certain principles – evaluation, transparency and accountability, appreciation of efforts, and equality of treatment. “If you ever have the opportunity to sit on the Board, or do an appraisal of the Board or company, do not have the myopic vision of regulations only, look at optimum utilization of resources for wealth creation and wealth sharing.”
G. N. Bajpai’ s new book, ‘The Essential Book of Corporate Governance’, which provides a trajectory of Corporate Governance in India, having an extraordinary sweep of history, philosophy, pedagogy and simple common sense to help maximize wealth creation, was also introduced to the participants during the course of the talk.
Joining G.N. Bajpai for the discussion were Shekar Viswanathan, Vice Chairman of Toyota Kirloskar, who has been with the Toyota project in India since inception, and Professor G. Ramesh from the Centre for Public Policy (CPP) at IIM Bangalore.
During an ideating discussion on ‘Value Creation through Corporate Governance’, hosted by IIMB’s CCGC, former SEBI Chairman discusses the essence of corporate governance, its objective, how to evaluate it and maximize its value
31 July, 2017, Bengaluru: “Corporate Governance is all about wealth creation, wealth management and wealth sharing – it is a philosophy of business”, said guest speaker G.N. Bajpai discussing the evolution of Corporate Governance, during a talk on ‘Value Creation through Corporate Governance’, hosted by the Centre for Corporate Governance and Citizenship (CCGC) at Indian Institute of Management Bangalore (IIMB), as part of its Leaderspeak Series, on July 31 (Monday), 2017.
G.N. Bajpai, who is the former Chairman of SEBI, as well as former Chairman of LIC, is the winner of the Prime Minister’s award for 'Outstanding Contribution to the Development of Finance’ and is on the Board of several corporations. The distinguished business leader went on to say that Corporate Governance is a term used more than any other in the corporate world, but “the real philosophy is lost in the din of the regulatory framework, legislative provisions and endless debates”.
He pointed out that the barrier to good corporate governance is varying interests of different stakeholders, which leads to abuse of authority and opportunity. That is how regulation came in to the picture and formation of legislation to ensure that the obstacles do not hinder good corporate governance.
“The framework of Corporate Governance rests on four pillars – related party transactions, following of the accounting standard, disclosure/transparency and boardroom practices. This is the broad framework. However, refinement remains a concern. Because of the variety and enormity of the framework, Corporate Governance is often confused with the observance of the framework alone.”
He further explained, “Resources of planet earth are limited, hence they need to be utilized optimally. There should be appraisal and rating of Corporate Governance as well. There are people from diverse backgrounds in the Board. Executive management should utilize this talent on board and there should be a Board agenda for the same.”
To optimize effectiveness, he suggested the right balance of youth (for risk-taking) and maturity (for a sense of proportion). “This combination will ensure superior decision-making in the Boardroom.”
Role defining is crucial, he observed. “The role of the board is to define the direction, strategy, and goal of value creation of the company. Executive management has to do the background work, suggest possible alternatives and execute strategies defined by the board to deliver the vision of value creation.”
His recommended certain principles – evaluation, transparency and accountability, appreciation of efforts, and equality of treatment. “If you ever have the opportunity to sit on the Board, or do an appraisal of the Board or company, do not have the myopic vision of regulations only, look at optimum utilization of resources for wealth creation and wealth sharing.”
G. N. Bajpai’ s new book, ‘The Essential Book of Corporate Governance’, which provides a trajectory of Corporate Governance in India, having an extraordinary sweep of history, philosophy, pedagogy and simple common sense to help maximize wealth creation, was also introduced to the participants during the course of the talk.
Joining G.N. Bajpai for the discussion were Shekar Viswanathan, Vice Chairman of Toyota Kirloskar, who has been with the Toyota project in India since inception, and Professor G. Ramesh from the Centre for Public Policy (CPP) at IIM Bangalore.