The Government believed in promoting ethical practices without burdening business with intense regulatory restrictions as "empowering business and protecting investors" was its motto, said NK Bhola, Regional Director (NR and NER), Ministry of Corporate Affairs.
Addressing a seminar on "Business Ethics", organized by Confederation of Indian Industry (CII), Jamshedpur, on Tuesday, Bhola said the two goals-empowering business and protecting investors-are bridged by ethical conduct of the business entities.
A business done complying with ethical codes paves its own path for attaining enormous empowerment and at the same time gains investors' confidence, Bhola said adding that government's role was in legislating, supervising and facilitating.
"The Companies Act 2013 progressively provides for self-regulations and 'comply or disclose' practices which signals pull outs of restrictions," he said. Following ethics in business being a key factor in corporate governance, Bhola said the term "Corporate Governance" gained prominence in the recent times when the corporate sector across the globe was hit by scandals and big companies like Enron, WorldCom saddled with questionable corporate policies collapsed. India too had its share of scam like Satyam, he said.
Though reforms in the area of corporate governance have been underway since 1990s, he said it was not until the Satyam scandal that exposed glaring gaps in the governance structure and auditing practices in the country that acted as catalyst for a modern legislation.
The Company Act, 2013 was a move by the government to strengthen the corporate governance framework in a country, where most of the businesses are characterized by concentrated shareholding and channelling of funds, he said.
Bhola claimed that the Act encouraged good governance practices by placing the onus on Independent Directors to bring oversight in the functioning of the Board and protect the interest of minority shareholders.
Speaking on the occasion, Fr Oswald Mascarenhas, JRD Tata Chair, Professor of Business Ethics, XLRI, attributed absence of business and moral ethics that had led seventeen reputed banks of the world including US-based Lehman Brothers to collapse causing one trillion dollars within a short span of time during economic recession in 2008.
In his welcome address, Tata Steel Managing Director (India and South East Asia), TV Narendran said Tata Group was founded on the basis of business ethics, which was being followed by Tata Steel as well as Tata Group of decades.
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