Yes Governance Matters.: Shouldering The Load: The Board Of Directors’ Joint Accountability For Corporate Governance

This article was first published on April 16, 2024 by MNLU MUMBAI’s Journal on Corporate Laws & Commercial Regulations on Manupatra.

This article explores the critical role of the Board of Directors in corporate governance, emphasizing the significance of their collective responsibility. It underscores the challenges faced by corporates from a governance perspective, particularly in the aftermath of the financial crisis, and raises a critical, yet underexplored question: whether fiduciary liability should be assessed individually or collectively. The article while highlighting the board’s role in decision-making, risk mitigation, transparency, accountability, and stakeholder confidence also discusses the legal framework, especially the Companies Act, 2013.

The narrative unfolds to address concerns related to potential drawbacks of collective responsibility, such as deterring experienced directors from joining boards due to personal liability fears. The paper asserts that effective corporate governance is crucial for a company’s success and sustainability. It advocates for a balanced approach between individual accountability and collective responsibility, emphasizing the need for continuous assessment and adaptation of regulations. The collaborative efforts of stakeholders are deemed vital for upholding transparency, integrity, and ethical behaviour, ultimately contributing to the organization’s success and societal impact.

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