Corporate Governance in the Network of Chartered Accountants in India

Corporate governance, sometimes referred to as the way in which companies are directed and controlled, is important for better management of chartered accountants.

Recent changes in company laws and governance codes in different territories underline this role, helping to map an evolving landscape of corporate governance that has a direct impact upon accounting professionals.

At the beginning of 2024, the Financial Reporting Council (FRC) published radical amendments to the UK Corporate Governance Code. These changes promote transparency and accountability and focus on important areas like board independence and leadership, the role of business in society, stakeholder interests for long term success. These amendments show that CG practices for Mauritius now reflect the global trend moving towards a more responsible corporate governance and sustainable long-term approaches thus promoting a broader definition of CG principles.

Meanwhile, the Irish Department of Enterprise, Trade and Employment revealed the General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 in March. This bill is making several changes, including significantly, making electronic meetings permanent, amending audit exemptions and detailing what receivers must disclose about their remuneration and qualifications. They are intended to help modernize corporate governance and adapt it for the digital age.

Some of the steps have been more proactive on part of Securities and Exchange Board of India (SEBI) in re-visiting corporate governance norms. The Securities & Exchange Board of India (SEBI) had, in January 2023, brought about amendments towards more stringent independence norm of independent directors, enhanced disclosures and better functioning of audit committees. This is one of the continuous reforms to solidify and align corporate with best practices across the globe.

The Ministry of Corporate Affairs (the MCA) in India had launched modernized corporate governance frameworks. The Companies (Amendment) Bill, 2020 when introduced was enacted as the Companies (Amendment) Act, 2021 and has through that route also made radical changes including allowing digital governance by permitting electronic means for board meetings and general meetings. It changes government to a digital governance that is more transparent and corporate-friendly.

Modernising corporate governance frameworks has also been a focus of India's Ministry of Corporate Affairs (MCA). Significant changes were brought about by the passage of the Companies (Amendment) Bill, 2020, which became law in 2021 and promoted digital governance by using electronic methods for board and general meetings. The goal of this move towards digital governance is to improve business operations' efficiency and transparency.

In India, chartered accountants are leading the way in establishing and upholding corporate governance norms. Their proficiency in financial reporting, regulatory compliance, and advising services is essential to guaranteeing that businesses follow best practices in governance. Indian chartered accountants assist businesses in navigating the intricate regulatory landscape by offering vital consultancy services. This involves making certain that the MCA's rules and the most recent revisions to SEBI are followed. They assist businesses in reducing risks and upholding strict governance requirements by doing this.

To keep current with the newest governance practices, chartered accountants must engage in ongoing professional development. To ensure that accountants are prepared to tackle new difficulties, the Institute of Chartered Accountants of India (ICAI) provides a range of corporate governance courses and seminars.

Through these educational programmes, accountants are better able to uphold professional standards and make meaningful contributions to company governance. In India, chartered accountants are also proponents of moral corporate conduct. They frequently participate in policy discussions with regulators and offer input on the creation of governance structures. The ICAI frequently collaborates with regulatory agencies like as the MCA and SEBI to offer suggestions and insights that influence corporate governance regulations.

Notwithstanding notable advancements, there are still obstacles in the domain of corporate governance in India. A crucial concern is making sure that governance procedures stay up to date with evolving business models and technology. Accountants also need to learn new techniques and abilities due to the growing emphasis on sustainability and Environmental, Social, and Governance (ESG) requirements.

Future corporate governance in India is probably going to incorporate ESG factors more deeply, involve stakeholders more actively, and leverage technology to increase accountability and transparency. Chartered accountants will have to adjust to these developments and use their knowledge to help businesses fulfil these new requirements.

Authored by:

Rajiv Sharma, Partner and Muskan Bansal, Associate at Singhania & Co.