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1 India has been ranked in the seventh place in terms of  corporate governance score in Asia Pacific region, says a report by global brokerage firm CLSA. According to the CLSA Corporate Governance Watch 2012 list 1 , produced in collaboration with the Asian Corporate Governance Association, India's corporate governance score has improved by 3 percentage points but ranking has remained the same."This is not due to a lack of awareness by the regulators, but rather a piecemeal approach to reform and a lame duck government unable to do an ything meaningful given infighting among its allies," ACGA Research Director Sharmila Gopinath said in the report 2 . ABSTRACT Corporate governance is defined as the system by which companies are directed and controlled. 3 The separation of ownership and control in corporations with dispersed ownership structure highlights the agency issue due to con flict between agents (managers) and principals (shareholders). The endeavor of the corporate governance mechanism in such a context is to monitor the management and ensure th at it functions to maximize shareholder wealth. Corporate governance issues in India are, however, due to a different agency problem that arises on account of the conflict between dominant and minority shareholders. Therefore, the corporate governance mechanism in India should focus on safeguarding minority shareholders from expropriation by dominant shareholders. Assessment of protection given to minority shareholders in India under the current regulatory framework suggests that on this attribute country doe s not fare well. There exist laws on minority shareholder protection, but either the y are not efficacious or not well enforced. Commensurately, there exists a significant gap in Indian corporate governance regulatory framework, which warrants utmost safeguards of minority shareholder rights. Policy makers possibly can do this by creating a favorable environment and promulgating laws for  protection of their rights. The issue has seri ous ramifications on Indian economy that is looking for greater foreign capital and investment to boo st its economic growth. 1  http://www.financialexpress.com/news/india-ranks-7th-in-corporate-governance-in-asiapacificreport/1006729/  2  http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/india-ranks-7th-in-corporate- governance-in-asia-pacific-clsa/articleshow/16512858.cms  3  Cadbury Report,Report of the committee on the Financial Aspects of Corporate Governance, Financial Reporting Council, GEE, London, 1992.

135370590 Corporate Governance in India

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