Corporate Governance – a Growth Differentiator

I have been speaking with a large number of professionals, Board members, Promoters about the role of  Good Corporate Governance practices in growth of a company.  Every one understood Corporate Governance  means just a ‘legal compliance’.  Undoubtedly it is.  The Board of every company must ensure the legal compliance in the company. 

However, is the role of a Board stops there?  I believe that the Board of Directors of a company is the highest body who are collectively responsible for the fate of a company – its growth, its fall, its business, its strategy, its social responsibility, its value creation and so on..

I think, there is a role play required.  When a promoter is also having an executive role and sitting in the Board, he should be accountable to the Board as an ‘executive’ and as a ‘manager’ and not as a Promoter.  This thin line differentiation is important for better governance.  However, it is possible only when other Independent Directors also show equal amount of understanding about the company.  It is important for Independent Directors to get aligned with the project/s of the company where they are sitting on the Board in order to play a constructive role.  In absence of playing active role by Independent Director, it would be very difficult to implement Good Corporate Governance practices in any company.

For a good corporate governance, good independent director are required.

In view of this, what could be the starting point for implementing Good Corporate Governance in any company?  Need to take the following steps simultaneously –

i.                     Start with legal compliance – it should be from a legal intent point of view rather legal textual compliance point of view.

ii.                   Start training Independent Directors – about the company’s business, their role and responsibilities.

Then move step by step to build Good Corporate Governance process which will be a differentiating factor for Growth for a company.