Boardroom in the Twenty-First Century: Issues and Challenges

The new economic policy initiated by the government in 1991 which led to liberalisation, end of license system, private sector involvement in economic development and disinvestment of public sector has given rise to increased expectations for greater accountability and effective functioning of organisations. The degree of expectation varies, depending on the nature of organisation, whether public or private sector, but nevertheless the requirement is common to all. It is in this context that corporate governance and the role of Board of Directors in the governance of organisations is receiving increased attention. The National Task Force set up by the Confedration of Indian Industry (CII) evolved in 1998, the “Desirable Corporate Governnance Code†which lays down the basic guidelines on issues concerning board of directors, desirable disclosures, capital market issues, creditors rights and financial institutions and nominee directors. In the case of public sector undertakings a novel scheme called “Navaratna†was introduced whereby the boards of nine central public sector companies were restructured with lesser number of officials from government and more professionals from outside. Reduced ownership of the government through disinvestment by more than 50 per cent seems to be the only answer to provide the PSUs with the requisite autonomy.