ROLES AND OBLIGATIONS OF KEY MANAGERIAL PERSONNEL (KMP) AND DIRECTORS IN CORPORATE GOVERNANCE: A STUDY OF INDIAN SCENARIO

Abstract

The new economic policy introduced by India in 1991 post the huge financial crisis has brought an opportunity as well as indispensable requirements to open the economy for global market competition. Economic globalisation and privatisation have led to the entry of Big corporate players and foreign institutional investors into the Indian market. With such globalisation and privatisation, the risk of corporate fraud, mismanagement as well as window dressing of financial accounts and records were also raised and various incidents like the Satyam Company Scam and fraud committed by Vijay Malia, Neerav Modi as well as ex-CEO of ICICI Bank. Ms Chandan Kochar was recorded in the recent past.

All these incidents were insisted by the government regulators as well as the judiciary to bring some major changes and reforms in corporate law over time. These incidents of corporate fraud and manipulation are generally. The outcomes of the decisions taken by the Board as well as Senior management including the KMP like MD, manager CEO and CFO.

Previous research studies disclosed the situation of Ground Zero implementation of corporate law in India and also suggested some preventive measures to effectively deal with wilful infringement or default. In this research study through the scrutinization and analysis of various data collected through primary and secondary sources, the researcher has made effort to review the various corporate laws including SEBI regulations as well as some other major statutes related to Environment, Foreign Exchange, Industries and Labour to find out the statutory obligations of the Board and Senior Management of a corporate entity. Researchers of this study also suggested some reforms or majors to efficiently deal with internal compliance issues such as the promotion and effective implementation of whistle-blower policy and provisions for ombudsmen. In reference to various recent incidents of huge corporate fraud and financial scams, as discussed in this research study, it is observed by the author that the corporate laws in India are more or less adequate but their practical implementation is not full proof and up to the level of accuracy in dealing with Big Corporate tycoons and Business Persons. This study also finds that various efforts were made by Indian Legislature to reform corporate laws in alignment with the present scenario but more actions and vigilance is required from Legislatures as well as Enforcement Agencies.