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The characteristics of successful companies in 21st century revolve round a) The ability of the company to develop new technology, b) Business will be the key generator of wealth, c) Business shall have wider base of stakeholder, d) Board members shall be time limited custodians of the companies and shall hold office till they are relevant rather than as inheritor. 21st century corporation shall change dramatically where distributed leadership, wider stakeholder base, environment protection, self regulation, transparency and natural justice will dominate the scene rather than box ticking. In addition to financial capital, human capital and natural capital, cultural capital will finally take the due place in fulfilling corporate governance norms.
Corporate governance will move from its base definition "Defining a relationship between those who own it and those who manage it" to a higher level of "stock holder" and "owning the future". Corporations will be transformed into a "corporate community" with self-regulation rather than internal control. Building an effective board attention requires structure, process, culture and remuneration of directors. Board culture has to be made intellectually stimulating rather than drab and dreary proceedings. Finally, ethical issues are to be tackled on war footing with the advent of new technology. Corporations must pledge to honor their obligation to the society by becoming economic, intellectual and social assets to each nation and community in which they operate.
Corporate Governance can be traced back to early 1990's when a series of corporate mismanagement and failures were reported in UK which led to the formation of Adrian Cadbury committee who came out with their first document, laying the foundation to the present day format of the corporate governance. This report was primarily based on the frauds perpetrated by some of the unscrupulous directors that were usurping stakeholders' money for their personal benefits. So the terms of reference of this committee were mainly on the financial aspects of the corporations and focused on the roles of the institutional investors, auditors and remuneration of the top executives along with some measures on internal controls. The Cadbury Committee's terms of reference were mainly restricted to issues related to accountability. |
