Facets of Corporate Governance and Corporate Social Responsibility in India (Accounting, Finance, Sustainability, Governance & Fraud: Theory and Application)

This book focuses on the legal and social aspects of corporate governance through doctrinal and empirical research papers presented at the 9th International Conference on Governance Fraud Ethics and Social Responsibility held at National Law University Delhi in 2018. The papers encompass the internal and external factors that affect the interests of a company’s stakeholders, including shareholders, customers, suppliers, government regulators and management, and several other important players. The book provides better clarity on the concept of corporate governance and how it is intertwined with factors such as sustainability, social responsibility and the role of government, taxation and audit, and shareholder engagement. Preface Acknowledgments Developments in Corporate Governance in India Contents Editor and Contributors Part ICorporate Governance 1 Shareholders’ Engagement and Sustainability of Companies Bibliography 2 Corporate Governance Failures as a Cause of Increasing Corporate Frauds in India—An Analysis 2.1 Corporate Governance and Frauds 2.2 Definition and Punishment of ‘Corporate Fraud’ 2.3 Corporate Frauds and the Securities Regulator—SEBI 2.4 Typology of Corporate Frauds 2.5 NSE Algo Scam or High Frequency Trading (HFT) Scam 2.6 Financial Reporting Frauds 2.6.1 Auditors and Auditing Practices 2.7 Weak Internal Controls: ‘Docile’ Board of Directors 2.8 ‘Layered Investment’ and the Significant Beneficial Owner 2.9 Credit Rating Agencies: When the Reference Point Itself Fails 2.10 Directors and Their Accountability 2.11 Fixing CEOs Pay—Judge in Its Own Cause 2.12 Banking Frauds—Rising NPAs—RBI’s Response 2.13 Frauds in Corporate Insolvency 2.14 Response to a Corporate Fraud—Focus on Corporate Governance 2.15 Conclusion References 3 Mitigating White Collar Crimes: A Governance Reform Agenda 3.1 Introduction 3.2 How the Corporate Crimes Surfaced? 3.3 White Collar Crimes: Lurid Imagery 3.4 What the Research Globally Evidenced? 3.5 Taxonomy of Occupational Fraud: Detection and Deterrence Thereof 3.6 Evolving Jurisprudence in Fraud Risk Mitigation- ‘Ex-Post’ Measures 3.7 Role of Internal Control in Prevention and Detection of fraud-Éx-Ante Measures 3.8 Epilogue: Governance Reforms in Light of Combat Mechanism to Occupational Crimes 3.9 Complexities in Investigation Detection and Deterrence References 4 Establishment, Inspection and Public Disclosure of Audit Quality Indicators 4.1 Introduction 4.2 Audit Quality Indicators 4.3 Samples of Audit Quality Indicators 4.3.1 Partner Workload 4.3.2 Experience of Audit Personnel 4.3.3 Audit Hours and Risk Areas 4.3.4 Frequency and Impact of Financial Statement Restatements for Errors 4.4 Audıt Qualıty Indıcators wıth Regard to Our Country 4.4.1 Establishing Standards 4.4.2 Inspection of Audit Quality Indicators 4.5 Conclusion References 5 Decoding Corporate Governance and Insolvency Related Issues in India 5.1 Satyam Scam and Corporate Failure 5.2 The Companies Act, 2013 and LODR Guidelines 5.3 Dispute Between Tata Sons and Cyrus Mistry 5.4 Uday Kotak Committee Report 5.5 Lehman Brothers Insolvency: A Case of Corporate Governance Failure 5.6 Insolvency and Bankruptcy in India 5.7 Synergies Dooray Automotive Case 5.8 Insolvency and Bankruptcy Amendment 5.9 Case Study of Essar Steel and Bhushan Steel 5.10 Report of the Insolvency Committee, 2018 5.11 Pre-pack Pool 5.12 Conclusion References Part IIGovernance 6 Conceptualizing Citizens Involvement in Governance 6.1 Introduction 6.2 Understanding and Role of Urban-Citizens’ in Governance 6.3 Participation in Decentralization Governance and Issues 6.4 Role of Civil Society 6.5 Conclusion References 7 Environmental Governance: Compliances and Consequences 7.1 Introduction 7.2 Cost of Non-compliance Under Environmental Related Enactment 7.2.1 Wild Life (Protection) Act 1972 7.2.2 Water Act 1974 7.2.3 Forest (Conservation) Act 1980 7.2.4 Air Act 1981 7.2.5 The Environmental Protection Act 1986 7.2.6 Public Liability Insurance Act 1991 7.2.7 Biological Diversity Act 2002 7.2.8 Environment Impact Assessment Notification 2006 7.2.9 National Green Tribunal Act 2010 7.2.10 Plastic Waste Management Rules 2016 7.2.11 E-Waste (Management) Rules 2016 7.2.12 Bio-Medical Waste Management Rules 2016 7.2.13 Construction and Demolition Waste Management Rules 2016 7.2.14 Hazardous and Other Waste (Management and Transboundary Movement) Rules 2016 7.2.15 Environmental Taxes 7.3 Conclusion References 8 Shari’ah Governance: A Solution to Corporate Governance Problem 8.1 Methodology 8.2 Literature Review 8.3 Conclusion References Part IIISocial Responsibility 9 Examining Some Options for Deducting CSR Expenses 9.1 Introduction 9.1.1 Problem Statement 9.1.2 Case Study 9.2 CSR Expenditure 9.3 Deductibility of CSR Expenditure in Terms of Sections 11(a) and 23(g) of the ITA 9.3.1 General Deduction Formula 9.3.2 Specific Case Law 9.4 CSR Contributions Through PBOs 9.4.1 Introduction 9.4.2 PBO Requirements 9.5 Section 18A Donations 9.6 Spending on Non-core Activities 9.7 Conclusion References 10 Corporate Social Responsibility and the Role of Government 10.1 Introduction 10.2 Corporate Social Responsibility—History, Concept and Standards 10.3 Corporate Social Responsibility: Legislative Mandate and the Role of Governments 10.4 CSR: Current Trends in India 10.5 CSR, the Indian Constitution and the Government 10.6 Conclusion References 11 The Sreni-Drawing the Legacy of CSR in India 11.1 Business as a Corporate Activity in Ancient India: The Rationale of Business as a Corporate Activity 11.2 Co-operation Became the Backbone of Other Spheres and not just Trade 11.3 Diversity in Co-operation and the Primacy of Sreni 11.4 Srenis—Origin and Allegiance to Multiple Activities 11.5 Sreni Governance and Corporate Social Responsibility in Ancient India 11.6 Factors Behind the Prevalence of the Sreni 11.7 Role of Monarchy and Sreni Governance 11.8 Internal Governance System of the Sreni 11.9 The Three –Tier System of Sreni-Governance 11.10 Centralized System of Management—a Crucial Factor in Sreni Governance 11.11 Transgressions and Sreni Functioning 11.12 Sreni Dharma and Democratic Functioning—the Cardinal Principle of Sreni Governance 11.13 The Apprenticeship Process—The Strength of the Sreni Governance 11.14 Sreni Governance and Social Responsibility 11.15 Economics, Ethics, and Social Responsibility 11.16 Financial Governance and Social Responsibility of the Sreni 11.17 Legal Governance and Social Responsibility of the Sreni 11.18 Decentralization and Separate Laws for Business Transaction 11.19 The Co-operative Basis for Business Laws and Sanctions 11.20 Trust and Public Faith- the Values of Sreni CSR 11.21 Conclusion References 12 Taxation and Mandatory CSR in India: The Perplexity Persists 12.1 Introduction 12.2 Companies Act, 2013: Ushering the Era of Mandatory CSR in India 12.3 Tax Treatment of Charitable Spending Prior to Companies Act, 2013 12.4 Finance Act, 2014: Provision and Effect 12.5 Taxation Issues in Mandatory CSR 12.6 Are There Linkages Between the Tax Policy and CSR Spending? 12.7 Conclusion and Suggestions References 13 Social Responsibility Investment: An En-route to Attain Social Responsibility Objectives by the Corporations 13.1 Introduction 13.2 Evolution and Present Trends 13.2.1 History 13.2.2 Recent Trends in SRI Investments 13.3 SRI—Its Relevance in Indian Context 13.4 A Road to Social Responsibility Investment 13.5 SRI Screens—The Important Benchmark of Investment 13.6 Conclusion References Author Index Subject Index