International Journal of Law

Authors
Dr. Chander Mohan

Abstract
Corporate Governance is “the system by which companies are directed and controlled”. It is the set of processes, customs, policies, laws and institutions by which corporation are directed, administered and controlled. It also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. It involves regulatory and market mechanism, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders. The principal stakeholders are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Corporate governance consist two elements: first is the long term relationship which has to deal with the checks and balances, incentives for manager and communications between management and investors. Second is the transactional relationship which involves dealing with disclosure and authority.