The Hindu Business Line : `Corporate governance must promote cos' long term interests'

Corporate governance tends to be confused with the protection of the interests of minority shareholders', especially so in the wake of the recent discoveries of corporate malfeasance in the US, said Mr Adi Godrej, Chairman, The Godrej Group.

Delivering a lecture organised by the Confederation of Indian Industry, Mr Godrej said that corporate governance should promote the long term good of the company and not necessarily the interests of the majority or minority stakeholders.

He said that it was understood that neglecting or bypassing the interests of the stakeholders was likely to adversely affect the long-term interests of the company.

Efficient supervision

Mr Godrej defined corporate governance as the efficient supervision which encourages `doing everything better' and protects the interest of the company while

conforming to all established laws and ethics.

He said corporate governance in any organisation needs to be principle based and SMART- smart, moral, accountable, responsive and transparent. Corporate governance has to be principle-based not rule-based.

Easily understandable

Mr Godrej said that principles of corporate governance have to be simple and easily understandable . Good governance also means high levels of accountability and responsiveness. He said that the need of the hour is effective enforcement. The government and the market regulators have to enforce the existing legislation rather than creating more legislation.

The advantages of good corporate governance are many, he said. Good governance provides a competitive advantage in the global marketplace. Well-governed companies raise capital widely, easily and cheaply. Good governance leads to improved employee morale and higher productivity.

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