Corporate governance is a topic that invites a multi-disciplinary as well as super-disciplinary view.

A corporation in modern times represents an amalgam of diverse social interests. The interests belong not only to the present generation, but also to the future one. It wields enormous economic and social prowess. Those in control of the corporation, therefore, hold enormous responsibility of multifarious dimensions - social, economic, ethical, scientific and technological.

Even though the thesis is that those who govern are in charge of and directly responsible for the results of activity orinactivity in different areas of operation, the cause and effect relationship between their decisions, actions and the results are not easy to perceive, detect and rectify. They are also the most difficult to foresee, to enable evolution of socially perfect inoculations.

The behavioural patterns of those who govern are embedded in the pressures and tensions of the modern day society. The mental frame of corporate decision-makers is inextricably linked to the undercurrents of social phenomena.

The values of accountability, social responsibility, long-term vision and ethical behaviour thus become more important if a country is to devise codified structures to monitor corporate governance.

The sheer complexity and economic vehemence of the corporate phenomenon of modern times are so baffling that the inevitable result is the collapse of legal, audit, and bureaucratic controls over corporate governance in almost all countries, whether it be the German model of supervisory boards, or the Japanese model ofshareholder silence, or the English model of permissive company law or the US model of shareholder vocalism.

Corporate affairs have been scandalised in almost every segment of modern day corporate legalism.

Bankruptcy: The social values enshrined in different systems of corporate governance have also depicted virtual bankruptcy of meaningful control. This is exemplified by the rejection of the proposal of Boeing's merger with McDonnell Douglas by the European Commission, although it was approved by America's anti-trust regulators. On the other hand, the Tata-Singapore Airlines joint venture for civil aviation in India, once cleared, was throttled by the political-bureaucratic control in India.

These examples of external controls over corporate affairs are enough proof of bankruptcy of external control over corporate governance. But this bankruptcy of legal controls is less than the bankruptcy of managerial vision within corporations. This bankruptcy is exemplified by the failure of the mostsophisticated corporation in Britain--British Telecom (BT)--to visualise the post-merger problems. BT after its decision to merge with MCI Communications in a $21-billion deal was surprised to realise that the ICI Group would suffer a loss of $800 million in the current year. This was despite BT knowing of the proposed expansion of MCI in the American market.

The Thesis: The thesis being developed here is that all external systems as well as internal mechanisms of management for excellence, inspite of the sophistication in their managerial technology, have failed to deliver the goods to the detriment of the investor, the consumer, the workman and the common man at large.

Corporate leaders in India, for example, going by the published reports of chairman's speeches at annual general meetings, have failed in their basic task of providing leadership by saying that in the background of the current industrial recession, there is no silver lining in the cloud.

Half-baked measures: The CIIpublication, Desirable Corporate Governance - A Code, limits the objective of good corporate governance to maximising long-term shareholder value. The reason given is that such is the global consensus. Since shareholders are residual claimants, this objective follows from the premise that in well-performing capital and financial markets, whatever maximises shareholder value must necessarily maximise corporate value, and best satisfy the claims of creditors, employees, and the State. The CII code ignores that the capital and financial markets are far from well-performing. In fact, not only are they positively ill-performing, they are also in the clutches of the ill-governing and ill-governed corporations. The Barings scandal, the MS Shoes fiasco, the CRB scam are also the results of the ill-functioning capital and financial markets. They are also the outcome of undesirable corporate governance. If they are taken for granted in recommending a code of desirable corporate governance, the code is bound to sufferfrom fundamental infirmity.

The code emphasises a strong and independent board drawing from an observation that even the best corporate performers risk stumbling some day if they lack strong and independent boards. The premise is that not all well-governed companies are the best performers on the stock markets, nor do all badly-governed ones sink. Even then the importance of good governance cannot be overemphasised.

Systems overhaul: The topic, therefore, requires a super-disciplinary view, the systems view, which requires an overhaul of the entire system on the global and national levels. Are we prepared to look at and make the sacrifices for this systems overhaul?

True, the CII code emphasises that corporate governance goes far beyond company law. According to the code, "The quantity, quality and frequency of financial and managerial disclosure, the extent to which the board of directors exercises its fiduciary responsibilities towards shareholders, the quality of information that managementsshare with their boards, and the commitment to run transparent companies, that maximise long-term shareholder value cannot be legislated at any level of detail. Instead, these evolve due to the catalytic role played by the more progressive elements within the corporate sector and, thus, enhance corporate law."

There is no disagreement on this. But that does not mean any discussion on the measures to improve corporate governance should have no focus at all on the task of re-enactment of the Companies Law.

Draft Companies Bill, 1997: On the background of the thesis that corporate governance requires the super-disciplinary view or the systems view, let us examine the work done on the draft bill to re-enact Companies Act, 1956 (introduced in the Rajya Sabha on August 14, 1997). Following is the critique of the performance of the working group on the companies bill.

The working group must be congratulated for its laudable effort in the following directions -

1. To make the law simple by dispensingwith meaningless provisions.

2. To privatise certain functions of the registrar of companies.

3. To professionalise the working of the Company Law Board by making it more comprehensive and practical.

4. Bestowing more care on investors and shareholders.

5. To make the law more liberal by diluting controls on companies and managements.

The group, however, has failed to usher in change in the basic thinking for ensuring a holistic corporate growth.