CREATING EFFECTIVE BOARDS
1
Author(s):
DR M.M.GOYAL
Vol - 5, Issue- 6 ,
Page(s) : 257 - 263
(2014 )
DOI : https://doi.org/10.32804/IRJMST
Abstract
1. INTRODUCTION
Board is the supreme power of the company. Several theories have defined status of directors differently, some say they are agents of the shareholders while some believe they are trustees of shareholder’s wealth. Separation of ownership and control gives powers to Board to act on behalf of the shareholders, who are the real owners of the company. What all decisions will be taken, how they will be taken and when are to be decided by the Board. Many corporate governance reforms are focused on Board as it steers the company. If the members of Board are corrupt, or engage in unethical practices, nothing can help the company from collapsing.
Corporate failures like Enron, Satyam, Qwest, Parmalat, Worldcom, Sunbeam, Tyco etc. have forced investors and regulators to question on the credibility of the Board. Some of these corporates followed all the regulations and had appropriate Board composition too. For instance, Satyam had combination of executive and non-executive directors, it had independent directors too. So then why and how the fraud happened? Were the directors not performing their duties properly? The Board members are representatives of shareholders and the corporate failures indicates that directors have failed to discharge their duties properly.
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