DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

Title of the Subject: Corporate Governance

Semester: IX
Name of the Faculty:Dr. P Bhuvaneswari
Total No. of Hours: 60 Credits: 4
Objectives:
The course shall offer the fundamental theories and practice of corporate governance.The good corporate
governance depends on the business ethics practised by the company. The role played by the boards of
directors, the equity holders and other stakeholders are relevant for good corporate governance. The impact
of avoiding conflict of interest with insider trading, mergers and acquisitions and legal compliance depends
on good governance by the BOD and shareholders the company. The shareholder activism leads to a good
corporate governance model.
The challenges to corporate governance are conditional on conduct of promoters, the BOD, the independent
directors, and the management. However, the subtle issues of governance failures or indiscretions have led
to governance failures and interest of the shareholders and fair plain in the securities market is
compromised. The company promoters or BOD indulging in rampant mis-governance, frauds, undue
enrichment, and deviant behaviour have led to the failure of the company and loss to the stakeholders,
securities market, and economy. Failure to exercise the fiduciary duty and professional responsibilities leads
to poor corporate governance. The BOD shall have ethical considerations in governance and the decision-
making.
The role of the independent directors has become more pertinent in increasing the efficacy of the company
and maintain the discipline of the promoters or the BOD. Similarly, the responsibilities of the internal and
external auditors have increased in the day to day affairs of the company. The conduct of auditors in
certifying the financial statements are crucial to a good corporate governance. The auditors shall be cautious
about the “dubious accounting practices” during the statutory compliances and reporting. An honest
forensic audit is required for curtailing alleged financial irregularities. Understanding the implications of
behaviour, skills required for managing and monitoring the governance situations, the adoption of strategic
planning and value creation for the shareholders.
The Securities Exchange Board of India as a regulator shall have to play a proactive role and take
appropriate measures in case of failure of the statutory violations under law and decipher the wrongdoing by
the companies. The SEBI shall check the transparency with accountability issues in decision-making by the
company. The SEBI shall investigate any failure of corporate governance and protect the unsuspecting
shareholders. The Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (LODR Regulation) and SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2018 (ICDR Regulation) are the regulatory framework in India.
The international corporate governance and developments across countries will have an impact in India. The
expectation of the foreign investor is that the company has ethical and responsible corporate practice.
Students Learning objective:
a. The students are expected to have knowledge and key skills to act as legal adviser to the companies
and understand the applicable governance obligations and standards of best practice and assess the
effectiveness and execution of governance roles and responsibilities of the stakeholders. In addition,
they must understand the functioning of the regulatory and governing authorities.
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

b. The students shall have an insight into the general concepts of corporate governance and its
application and learn constructing a solution in each situation.
c. Understand the role and responsibilities of the BOD, Promoter and its group, majority shareholders
and minority protection and auditors of the company.
d. To make students understand the corporate governance law and practice at national and international
context
e. To know the governance factors and regulatory framework and best practices and legal compliance.

Unit UNIT 1 No. of

No. Hours
1.1 Introduction to Corporate Governance - Importance of Ethics & Moral standards in 10
Business - Approach for Managers in Decision Making - Social Responsibility of
Corporate - Role of Board of Directors (BOD) -
Companies Act of 2013 - Fiduciary duties and responsibilities - Duty of care - Loyalty
- Disclosure - Business Judgment Rule - Separation of Ownership and Control
Enron; WorldCom; Ahold; Samsung; Satyam; Sahara; Scams Kingfisher Airlines,
United Spirits, Ricoh India, Fortis Scams and Tata Group Shareholders and Board
Conflicts
1.2 Economic interest of Stakeholders - Maximizing shareholder value -Wealth v
Profitability and Dividend - Short-term investors v long-term Investors – Role of the
Institutional Investors
IT Risks - Cyber security - Deficient or non-existent internal controls - Privacy breach
- Reputational damage - Investor loss
1.3 Governance v Management - ‘Business risk’ and ‘Governance risk’ - Corporate
Democracy - Shareholder Activism - Derivative action - Whistle-blowing policy and
procedures - Red flags for board defects
Executive compensation
Corporate Social Responsibility and sustainability – the Employees, Environment,
Human rights, Communities and Social Welfare, Social Investment, Ethical Conduct -
Triple Bottom Line
Cases
Saurashtra Cement Ltd & another v UOI & others, 2006 Indlaw GUJ 531; 2007 (2)
G.L.R. 1384
Hari Sankaran v UOI & others, 2019 Indlaw SC 586
LeelabaiGajanan Pansare & Others v Oriental Insurance Co. Ltd & Others, (2008) 9
SCC 720
SFIO & another v Rahul Modi & another, 2019 Indlaw SC 378
63 Moons Technologies Limited and others v UOI & others, 2019 Indlaw SC 498
N. Narayanan v Adjudicating Officer, SEBI, (2013) 12 SCC 152
Chitra Sharma and others v UOI & others, 2018 Indlaw SC 640
Sesa Industries Limited v Krishna H. Bajaj and others, (2011) 3 SCC 218
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

Sahara India Real Estate Corp. Ltd. &Ors v SEBI &Anr, (2013) 1 SCC 1
Vodafone International Holdings B.V. v UOI &Anr., (2012) 6 SCC 613
Reliance Natural Resources Ltd. v Reliance Industries Ltd, (2010) 7 SCC 1
Price Waterhouse & Co. & others v SEBI, 2019 Indlaw SAT 90
UmeshKhariwala v SEBI, 2019 Indlaw SAT 86
UNIT 2
2.1 Family Run business - Control-mechanisms to keep firm control on the corporate 08
entity - Boardroom Diversity / Dynamics - management accountability to the Board
and Board accountability to shareholders
Private and Public Company – Listed and Unlisted Company - Not-for-profit sector
and Corporate Governance - Primary and Secondary market Development
Cases:
Cyrus Investments Pvt. Ltd. & another v Tata Sons Ltd. & others, 2017 Indlaw
NCLAT 126
2.2 Group Entities / Cross-holdings - Pyramiding corporate establishments - Corporate
governance requirements with respect to subsidiary of listed entity - Management of
the unlisted subsidiary
2.3 Role of market intermediaries in Corporate Governance
Cases:
a) Videocon International Ltd. v SEBI & Others, 2002 Indlaw SAT 14; 2002 (3) CLC
1000
b) Samir C. Arora v SEBI, 2004 Indlaw SAT 43; [2005] 125 Comp Cas 409
c) Almondz Global Securities Ltd & others v SEBI, 2016 Indlaw SAT 119
d) Financial Technologies (India) Ltd v SEBI, 2014 Indlaw SAT 54
e) K. M. Venkateswaran v SEBI, 2005 Indlaw SAT 114
f) Manmohan Shetty v SEBI, 2011 Indlaw SAT 18

UNIT 3
3.1 Corporate Governance System Worldwide – Theories 10
Corporate Governance in International Scenario
a. Anglo-American Unitary Model
b. European dual model (multi-stakeholder model)
c. Japan’s multi-stake holding model
d. Management- focused unitary model
e. Indian managing agency model
3,2 US Model
The Public Company Accounting Reform and Investor Protection Act of 2002
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

(Sarbanes-Oxley Act); Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010 (the Dodd-Frank Act)
UK law and Corporate Governance - UK Corporate Governance Code (2018)
a. Cadbury Committee (1992)
b. Greenbury Committee (1995)
c. Hampel Committee (1998)
OECD Principles of Corporate Governance
3.3 Cross-Country comparison - Cross-Border investment by foreign investors - Investor
protection and home bias
a) Revlon, Inc. v Macandrews& Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986)
b) Paramount Communications, Inc. v Time, Inc., 571 A.2d 1140 (Del. 1989)
c) The Walt Disney Company Derivative Litigation, In re Walt Disney Co. Derivative
Litigation, 907 A.2d 693 (Del. Ch. 2005)
UNIT 4
4 Corporate Governance - Development in India 12
a. Kumar Mangalam Committee
b. Indian model of Corporate Governance
c. RBI Committee on Corporate Governance
d. CII Code on Corporate Governance
e. N.R. Narayana Murthy Committee
f. Naresh Chandra Committee
g. Irani Committee
UNIT 5
5 A. Clause 49 of the Listing Agreement 20
B. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Corporate Governance Under LODR Regulations
1. Shareholder participation in key corporate governance decisions - protection for
minority shareholders
2. Role of stakeholders in corporate governance
3. Responsibilities of the Board of Directors & Auditors (Internal & External
auditors)
4. Obligations with respect to
a. Independent & Nominee Directors
b. Employees (Senior Management - KMP - Promoters)
5. Composition of its BOD’s - Constitution of Committees
a. Audit Committee
b. Nomination & Remuneration Committee
c. Stakeholders Relationship Committee
d. Remuneration Committee
e. Risk Management Committee
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

6. Timely information - Disclosures & Transparency - Concept of ‘comply or explain

- Financial and business reporting
Obligations of Listed Entity under Chapter IV
C. SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR
Regulation)

Sl. No. REFERENCE BOOKS

1. S.K. Bhatia, Business Ethics and Managerial Values, Deep & Deep
Publications
2. David F. Larcker, Brian Tayan, Corporate Governance Matters: A
Closer Look at Organizational Choices and their Consequences,
Stanford GSB
3. Larcker, David and Tayan, Brian, Corporate Governance Matters: A
Closer Look at Organizational Choices and Their Consequences, (Pearson
Education 2011) ISBN: 978-0-13-218026-9
4. Reed Darryl, Corporate Governance, Economic Reforms & Development
(Oxford) - Corporate Governance & Business Ethics (Mc Millan)
5. Monks, Robert A.G. and Nell Minow, Corporate Governance, New York,
John Wiley & Sons Publication
6. Kenneth Kim, John R. Nofsinger, Derek J Mohr, Corporate Governance,
Prentice Hall publication
7. G. N. Bajpai, The Essential Book of Corporate Governance, Sage
Publication
8. Jean Tirole, The Theory of Corporate Finance, Princeton University Press
9. James McRitchie, Corporate Governance: Cases and Materials
10. MacMallin, Corporate Governance, OUP
11. Kenneth Kim, John R. Nofsinger, Derek J Mohr, Corporate Governance,
Prentice Hall
12. Velasquez, Business Ethics – Concepts and Cases (Prentice Hall, 6th Ed.)
13. David F. Larcker, Brian Tayan,A Real Look at Real World Corporate
Governance, Stanford GSB
14. Bob Tricker , Corporate Governance, Oxford Publication
15. Rolf H. Carlsson, Ownership and Value Creation: Strategic Corporate
Governance in the New Economy, Wiley Publication
16. G.P. Stapledon, Institutional Shareholders and Corporate Governance,
Clarendon Press
17. Corporate Governance: A practical guide for accountants, CIMA
Publishing
18. Mike Wright, Donald S. Siegel, Kevin Keasey, Igor Filatotchev, The
Oxford Handbook of Corporate Governance,OUP
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

19. Corporate Governance, Indian Institute of Corporate Affairs, Taxman

20. A. C. Fernando, Corporate Governance: Principles, Policies and Practices,
Pearson Education India
21. Corporate Governance Around the World, Routledge Studies
in Corporate Governance

22. Dr. C. L. Bansal, Corporate Governance, Taxman

23. NeeruVasishth &Namita Rajput, Corporate Governance Values & Ethics
with Case Studies, Taxman
24. B.D. Chatterjee, Guide to Corporate Governance, Bloomsbury
25. Walther Ch. Zimmerli, Klaus Richter & Markus Holzinger, Corporate
Ethics and Corporate Governance, Springer
26. S. Rao Vallabhaneni, Corporate Management, Governance, And Ethics
Best Practices, Association of Professionals in Business Management,
John Wiley & Sons
27. Anil Kumar  &Jyotsna Rajan, Governance Ethics and Social
Responsibility of Business, Taxman
28. Mark Hirschey, Kose John and Anil K. Makhija, Corporate Governance: A
Global Perspective, Elsevier Ltd
29. G.J. (Deon) Rossouw and Alejo Jose G. Sison, Global Perspectives on
Ethics of Corporate Governance, Palgrave Macmillan
30. Christine A. Mallin, Handbook on International Corporate Governance
Handbook on International Corporate Governance Country Analyses,
Edward Elgar Publishing Limited
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

ARTICLES FOR REFERENCE:

1. AdebolaAdeyemi, Balancing the Objectives of Corporate Governance: Social Welfare v
Profitability, 83 J.L. Pol’y& Globalization 31 (2019)
2. Ahmed Al-Hawamdeh& Roger Welch, Corporate Governance and Workplace
Democracy: Some Paradigms and Paradoxes, 56 J.L. Pol'y& Globalization 1 (2016)
3. AkshayaKamalnath, The Perennial Quest for Board Independence: Artificial Intelligence
to the Rescue, 83 Alb. L. Rev. 43 (2019)
4. Anup Agrawal & Tommy Cooper, Corporate Governance Consequences of Accounting
Scandals: Evidence from Top Management, CFO and Auditor Turnover, Quarterly
Journal of Finance Vol. 7, No. 1 (2016) 1650014, World Scientific Publishing Company
and Midwest Finance Association.
5. ArjyaMajumdar, Convergence in Corporate Governance: The Case of China and India, 7
BRICS.L.J. 59 (2020)
6. David C. Donald, Conceiving Corporate Governance for an Asian Environment, 12 U.
Pa. Asian L. Rev. 88 (2016)
7. Eric J. Gouvin, What’s Law Got to Do with It: An Essay about the Balance of Power in
Corporate Governance between Officers, Directors, and Shareholders, 50 New Eng. L.
Rev. On Remand 92 (2015-2016)
8. Gabaix, X., and A. Landier, Why Has CEO Pay Increased So Much? Quarterly Journal of
Economics, (2008)
9. Gaia Balp, The Corporate Governance Role of Retail Investors, 31 Loy. Consumer L.
Rev. 47 (2018)
10. Greenwood, Robin, and Michael Schor, Investor Activism and Takeovers, Journal of
Financial Economics, (2009)
11. Harpreet Kaur, Promoters and Corporate Governance under the Companies Act, 2013, 3
J. Nat'l L. U. Delhi 53 (2015-2016)
12. Hartzell, Jay C. and Laura T. Starks, “Institutional investors and executive
compensation”, Journal of Finance, (2003)
13. Hermalin and Weisbach, Endogenously Chosen Boards of Directors and Their
Monitoring of Management, American Economic Review, (1998)
14. Jingchen Zhao, Promoting a More Efficient Corporate Governance Model in Emerging
Markets through Corporate Law, 15 Wash. U. Global Stud. L. Rev. 447 (2016).
15. Jingchen Zhao, Promoting a More Efficient Corporate Governance Model in Emerging
Markets through Corporate Law, 15 Wash. U. Global Stud. L. Rev. 447 (2016)
16. John C. Jr. Coffee, Privatization and Corporate Governance: The Lessons from
Securities Market Failure, 25 J. Corp. L. 1 (1999).
17. KeckesAndras, The Legal Theory of Stakeholder Protection, 2010 Jura: A
PecsiTudomanyegyetemAllam- esJogtudomanyiKaranaktudomanyoslapja 67 (2010).
18. Klein, A., and Zur, E., Entrepreneurial shareholder activism: Hedge funds and other
private investors, Journal of Finance, (2009)
 DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

~ a cradle of future jurists ~

VISAKHAPATNAM, ANDHRA PRADESH

19. Lyman Johnson, Law and Legal Theory in the History of Corporate Responsibility:
Corporate Personhood, 35 Seattle U. L. Rev. 1135 (2012)

20. Martin B. Robins, Pay + Board Composition + Personal Behavior - Corporate

Governance: In Search of Conceptual Change, 11 U.C. Davis Bus. L.J. 325 2010-2011
21. Pnakaj Kumar Gupta & Singh Shallu, Evolving Legal Framework of Corporate
Governance in India - Issues and Challenges, 4 Juridical Trib. 239 (2014)
22. Robert B. Thompson, Corporate Governance after Enron, 40 Hous. L. Rev. 99 (2003).
23. Robert J. Rhee, A Legal Theory of Shareholder Primacy, 102 Minn. L. Rev. 1951 (2018)
24. Ross Grantham, The Doctrinal Basis of the Rights of Company Shareholders, 57
Cambridge L.J. 554 (1998)
25. Seven Myths of Corporate Governance, Stanford Closer Look Series,
http://www.gsb.stanford.edu/sites/default/files/documents/CGRP16Myths_4.pdf
26. Thomas W. Joo, Narrative, Myth, and Morality in Corporate Legal Theory, 2009 Mich.
St. L. Rev. 1091 (2009)
27. Timothy L. Fort & Cindy A. Schipani, Adapting Corporate Governance for Sustainable
Peace, 36 Vand. J. Transnat’l L. 377 (2003)
28. UmakanthVarottil, Evolution and Effectiveness of Independent Directors in Indian
Corporate Governance, 6 Hastings Bus. L.J. 281 (2010)
29. UnmakanthVarottil, A Cautionary Tale of the Transplant Effect on Indian Corporate
Governance, 21 Nat'l L. Sch. India Rev. 1 (2009)
30. William W. Bratton, Collected Lectures and Talks on Corporate Law, Legal Theory,
History, Finance, and Governance, 42 Seattle U. L. Rev. 755 (2019).
31. William W. Bratton, Enron and the Dark Side of Shareholder Value, Georgetown
University Law Center, [email protected]
32. Yanmin Gao &Jeong-Bon Kim & Desmond Tsang &Haibin Wu, Go before the whistle
blows: an empirical analysis of director turnover and financial fraud, Springer
Science+Business Media New York 2016
33. Adams, Hermalin, and Weisbach, The Role of Boards of Directors in Corporate
Governance: A Conceptual Framework and Survey, Journal of Economic Literature,
(2010)