There is a strict need for corporate governance in the era of scams. People who are expert at corporate governance draw a premium in the marketplace given the paramount importance of corporate governance, and companies that are known to have strong corporate governance draw a premium on their share price even and marquee investors who can easily trust their money.
Let’s elaborate on this so that you can appreciate fully how important corporate governance is becoming.
A couple of days back, I was going through my news feed and I came across an article about Nirav Modi. Interpol had issued a ‘red corner notice’ in his name, which empowers 192 member-countries to arrest a suspect provisionally. Interpol clarified that they could not compel any country to apprehend or send its officers to conduct an arrest. They can only assist national police forces in identifying or locating the individual to be arrested.
This took me back to the PNB scam and the failure of corporate governance. There had been a transaction fraud of INR 11,400 crores at Punjab National Bank. It came to light when Nirav Modi’s partnerships firms applied for a buyer’s credit, and the bank official requested to furnish 100% cash margin for the Letters of Undertakings (LoU).
The firm representatives insisted that they have availed the facility earlier, but there was no record which reflected the same. Upon further investigation, it turned out that two bank employees had fraudulently issued the LoUs in the past without following the prescribed procedures. They had transmitted instructions to overseas branches for buyer’s credit without making entries in the system.
So what are these procedures and processes which were circumvented? How is a bank not able to track such amounts of a fraudulent transaction? Aren’t there any laws or mechanisms in place, which can help avoid these issues? Everybody asked these questions. The answer lies in corporate governance.
There are laws and guidelines for effective corporate governance like the Companies Acts 2013, SEBI (Securities and Exchange Board of India) Guidelines, Accounting Standards issued by the ICAI, Standard Listing Agreement of Stock and the Secretarial Standards Issued by the ICSI. To know more about the regulatory framework for corporate governance in India you can read this article.
With such laws in place, how did such a transactional fraud take place?
The answer to that is simple. In an ideal scenario, corporate governance in a company would mean having a person-agnostic system in place. It means that the processes and mechanisms will be in place independent of the employees. Such a framework should be in place which allows the smooth execution of all functions.
An employee may be on leave or retire, but the system would lay down steps for a smooth transition for anyone to step in and continue the work. It ensures effective communication, transparency and accountability on the part of the company irrespective of the presence of the employee.
In fact, corporate governance is the reason why the fraud came into light. While running the prescribed checks for extending buyer’s credit, it was evident that there was no record of the previous transaction. Further investigation led to the two employees who were responsible for performing those checks at the time but failed to do so.
The importance and need for effective corporate governance are undeniable. But the problem is that many companies fail to understand the importance of the establishing the mechanisms in time. They consider the immediate cost and time being invested, but fail to realise that with a smooth and transparent system in place, they are benefited in the long run.
The process of corporate governance seeps into every aspect of the company’s function. For instance, if a new legal head of is inducted, he will need to know who handles which aspect of the department. He would be aided by say, a litigation management database to keep track of ongoing litigation.
Similarly, a contract management system will help him to keep up with the current work. He will be able not only to access the system, but he can get in touch with relevant officers in case of any clarification.
But the problem remains, that companies cannot implement these complex systems which are quite tedious as a matter of fact. So they need experts who can help achieve this urgent need for corporate governance.
How do you gain the necessary expertise and experience in corporate of governance?
Through CS courses?
They take years to complete.
Then maybe through workshops?
But they are far too short and crammed.
By mulling over the guidelines and bare acts?
They are too time consuming and incomprehensive and theoretical.
With this in mind, we at LawSikho, bring to you the most comprehensive Diploma in Companies Act and Corporate Governance which is designed to be practical and task oriented. You learn the following modules in the course:
MODULE 1: HOW TO START A COMPANY
MODULE 2: HOW TO RUN A COMPANY: MANAGEMENT AND ADMINISTRATION
MODULE 3: COMPANY OFFICERS AND KEY MANAGERIAL PERSONNEL: APPOINTMENT, RESPONSIBILITIES, REMUNERATION AND TERMINATION
MODULE 4: INVESTMENT AND DEBT FINANCE
MODULE 5: CAPITAL MARKETS AND SHARE RELATED DEALINGS
MODULE 6: MERGERS AND ACQUISITIONS
MODULE 7: RELATED PARTY TRANSACTIONS: DIRECTOR-COMPANY AND GROUP DEALINGS
MODULE 8: CORPORATE ACCOUNTS AND AUDITORS
MODULE 9: CORPORATE SOCIAL RESPONSIBILITY
MODULE 10: HOW TO OBTAIN INFORMATION ABOUT A COMPANY: MCA AND STOCK EXCHANGE RELATED PROCESSES
MODULE 11: ADMINISTRATIVE AND APPELLATE AUTHORITIES
MODULE 12: MINORITY RIGHTS, OPPRESSION & MISMANAGEMENT
MODULE 13: INSOLVENCY, BANKRUPTCY AND WINDING UP OF A COMPANY
We give exercises which not only requires you to gain the knowledge in the subject, but also its practical application. They are not run-of-the-mill questions that you find answers for in books and manuals. They need you to apply yourself. This is the quality we help you to learn which will set you apart from the rest.
Here’s a few sample exercises from our course:
- All fun Breweries Limited has secured finance from Golden Small Finance Bank to the extent of INR 3 crores. For this purpose, it has hypothecated specific brewery equipment in its brewery located on the outskirts of Thane with the bank. The hypothecation agreement has been signed on 2nd July 2018.
- What are the compliance requirements under the Companies Act, 2013 which are required to be met by All fun Breweries Limited and what are the deadlines for these?
- Will Golden Small Finance Bank be affected if All fun does not meet with the compliance requirements? If yes, what steps can it take?
- What are the consequences that All fun will face if it does not meet the compliance requirements?
- How will prospective lenders to All fun be affected by this transaction?
2. Abhishek Chemicals Limited, a company engaged in manufacturing special fertilisers
and is listed on NSE is preparing to approve the quarterly results for the second
quarter and have a board meeting for this purpose. Draft a notice and agenda for this
board meeting including the following items, in addition to the usual matters [Hint:
Look out for a few notices on the NSE website to know in which month most of the
meetings for approving second quarter results are held] :
- Approval of the second quarter results
- Approval of limited review report
- Discussion on setting up of a subsidiary entity engaged in the business of pesticides and contribution of capital towards it. Set up a sub-committee consisting of three executive directors to discuss this matter further and report to the Board [Hint: Make relevant assumptions – this is supposed to be a discussion and the resolution will only relates to setting up of the committee, not investment in subsidiary]
- Appointing Mr Sanjay Sharma, CFO as the company’s representative to attend the Annual General Meeting of Vibhav Industries Limited, a joint venture entity of the company. [Hint: Section 113 of the Companies Act, 2013]
- Appointment of a professional director Mr. Niranjan Chari, who has significant experience in securing finance. [Hint: Find out the category of director he will be and accordingly check for how long he can be appointed]
List what documents should be attached as board papers for proper discussion on these items.
These exercises are created with the sole purpose of bridging the gap between your theoretical knowledge and its practical application. You get a thoroughly curated curriculum along with reading materials, video sessions, self-assessment quizzes, weekly exercises and regular feedback sessions.
This helps you build a knowledge base in companies act and corporate governance. We help you develop your skills in this area with regular exercises and regular feedback.
We have limited seats in our batch. As we have provision for live interaction and personal feedback along with weekly classes, we cannot admit more than 20 students in a batch. Please note that over 50% of the seats are filled up so far. Do hurry and book your seats, as after 20 seats are filled up, we will not be able to take your admission.
Course Commencement Date: 16th July 2018
Last Date To Enroll For The Course: 15th July 2018
Course Fee: INR 20,000 [Introductory Price – Available Only Till 15th July 2018]
Duration Of The Course: 1 Year
Seats: 20 (Limited Seats)
To enroll: click here.
Join now. The seats are filling fast. If you join now, you get access to the materials right away. You can start learning right away, and the exercises and live classes will start on the designated start date.
Do you have a question regarding the course? Do you want to explore how you can use this course to progress in your career?
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