Is Corporate Governance Improving in India? The Test Beyond Compliance 

Is corporate governance improving in India through stronger regulations, stricter disclosure requirements, and greater emphasis on board accountability? Whether corporate governance is improving in India remains an important question, as recurring governance failures continue to raise concerns about enforcement, transparency, and corporate accountability.

The challenge lies in the difference between having rules and ensuring they work. A company may meet disclosure requirements, maintain an audit committee, and appoint independent directors, but these measures mean little if they fail to identify risks, question questionable decisions, or protect shareholders’ interests.

To understand whether corporate governance is improving in India, it is important to examine the Companies Act, 2013, SEBI’s Listing Obligations and Disclosure Requirements (LODR), and provisions governing independent directors, audit committees, and shareholder rights. However, the existence of these safeguards does not establish how effectively they operate in practice.

The question of whether corporate governance is improving in India depends on whether regulatory reforms translate into meaningful corporate accountability or leave a persistent gap between compliance and effective oversight.

Welcome to The Business Hotseat, where we examine the progress, the shortcomings, and the realities shaping corporate governance improving in India.

Question 1: Is corporate governance improving in India?

Is corporate governance improving in India beyond regulatory compliance? The answer is not straightforward because a more comprehensive framework does not necessarily translate into stronger oversight and accountability.

The progress of corporate governance improving in India depends on how effectively existing laws and regulations strengthen accountability, transparency, and board oversight. The Companies Act, 2013 and SEBI’s LODR framework govern areas including board composition, independent directors, audit committees, related-party transactions, disclosures, and shareholder rights.

This shift is significant when assessing whether corporate governance is improving in India because listed companies now operate within a wider regulatory and accountability framework. Corporate governance is no longer treated simply as an internal matter between a company’s management and its owners. Listed companies operate within a wider system involving regulators, minority shareholders, institutional investors, auditors, boards, and public markets.

The real test of corporate governance improving in India lies beyond the existence of regulations and depends on their effective implementation.

A company may have an audit committee. It may appoint independent directors. It may publish extensive disclosures. The harder question is whether those mechanisms actually influence decisions when powerful interests are involved.

That is the gap between governance on paper and governance in practice.

And that gap takes us directly to the regulator.

Question 2: What are SEBI’s latest governance reforms?

Understanding whether corporate governance is improving in India requires examining SEBI’s recent governance measures, which focus on the quality and usefulness of corporate information rather than disclosure alone.

Related-party transactions provide a useful example of corporate governance improving in India through stronger disclosure requirements and scrutiny. In 2025, SEBI introduced industry standards specifying the minimum information listed companies must provide to audit committees and shareholders when seeking approval for related-party transactions. Following stakeholder feedback, the standards were revised in June 2025 and took effect on September 1, 2025. On October 13, 2025, SEBI introduced further relaxations. Under the revised provisions, transactions not exceeding ₹1 crore were exempt from the specified information requirements, while transactions above ₹1 crore but within the lower of 1% of the listed entity’s annual consolidated turnover or ₹10 crore were subject to simplified disclosure requirements. The changes took effect immediately.

These changes highlight the balance regulators must strike between strengthening oversight and keeping compliance requirements proportionate. Related-party transactions can serve legitimate commercial purposes, but they can also raise concerns about conflicts of interest, promoter influence, minority shareholder protection, and the quality of board oversight, issues central to India’s efforts to raise corporate governance standards.

One indicator of corporate governance improving in India is whether audit committees and shareholders receive enough information to assess transactions and question decisions when necessary.

Ultimately, this raises a broader question: Does compliance change behaviour, or does it simply produce another document?

That question becomes particularly important when governance mechanisms exist on paper but fail to prevent questionable conduct.

Question 3: Why does corporate governance still fail in India?

One reason it is difficult to determine whether corporate governance is improving in India is that governance failures do not always begin with the absence of regulation.

Sometimes the problem is concentrated ownership. Sometimes it is insufficiently independent oversight. Sometimes related-party transactions are not scrutinised rigorously enough. Sometimes internal controls or disclosures fail. And sometimes the formal structure exists, but the culture surrounding it discourages meaningful challenge.

India’s promoter-led corporate structure makes this particularly relevant. Promoter ownership is not itself evidence of poor governance, but corporate governance improving in India requires effective checks on conflicts of interest and the influence of controlling shareholders. But when controlling shareholders possess significant influence, the relationship between promoters, boards, management, and minority shareholders becomes an important governance consideration.

The history of Indian business offers a stark example of this gap.

The Satyam scandal exposed how financial reporting, auditing, and board oversight could fail despite the presence of formal corporate governance structures. The deeper lesson was that audits, independent directors, and internal controls cannot guarantee accountability if they fail to question misleading information or challenge those in power. The scandal became a turning point in India’s broader conversation about corporate governance.

The distinction between having governance safeguards and ensuring that they work remains relevant today. In June 2026, SEBI’s interim order concerning Rajesh Exports Limited recorded prima facie findings relating to the disclosure of certain related-party transactions and the required prior Audit Committee approvals. As the order is interim, these findings should not be treated as a final determination. The case nevertheless illustrates why formal governance requirements must be supported by effective oversight and enforcement. 

Neither case, on its own, proves that India’s entire regulatory framework is ineffective. Instead, they highlight a continuing challenge: rules and formal structures can establish expectations, but their effectiveness depends on how consistently they are applied and whether those responsible for oversight are willing to act.

This brings us to the law itself.

Question 4: How effective are India’s corporate governance laws?

Assessing whether corporate governance is improving in India requires examining how effectively the country’s corporate governance laws establish and enforce responsibilities.

The Companies Act provides the statutory foundation, while SEBI’s LODR framework establishes extensive requirements for listed entities. Together, they cover areas such as board composition, independent directors, audit committees, disclosures, related-party transactions, and shareholder interests.

In that sense, the question is no longer whether India has a corporate governance framework, but how effectively it works in practice.

The more difficult question is how effectively that framework works when its safeguards are actually needed.

Laws can require an independent director to sit on a board. They cannot manufacture independence of thought.

Regulations can require disclosure. They cannot guarantee that shareholders will understand every material risk hidden inside that disclosure.

Rules can require audit committees to review transactions. They cannot guarantee that every committee will challenge management with the same level of scrutiny.

That is why effective governance depends on several parts of the system working together: regulators, boards, independent directors, auditors, institutional investors, shareholders, and company management.

Enforcement matters too.

In its January 2024 judgment in Vishal Tiwari v. Union of India, concerning the Adani Group, the Supreme Court found that “no apparent regulatory failure can be attributed to SEBI based on the material before this Court.” The Court noted that 22 of SEBI’s 24 investigations had been completed and directed it to conclude the remaining two, preferably within three months. The original Supreme Court judgment addressed the specific allegations and material before the Court; it should not be read as a blanket assessment of corporate governance or regulatory effectiveness across India.

The lesson is not that regulation alone can prevent every governance failure. It is that regulation, oversight, disclosure, enforcement, and corporate culture must work together to make accountability meaningful. The real measure of corporate governance lies not only in the strength of the rules, but in whether they lead to responsible decisions and effective action.

Question 5: If corporate governance has improved, what still needs to change?

If corporate governance is improving in India, the next stage of progress must focus less on adding rules and more on ensuring they work effectively in practice. Three signs can help show what stronger corporate governance looks like inside a company.

1. Independent directors who can scrutinise decisions.

Better governance means more than appointing independent directors; it requires effective board and committee oversight. Section 177 of the Companies Act, 2013, requires the audit committees of covered companies to have a majority of independent directors and assigns them responsibilities that include reviewing financial statements, monitoring auditor independence, and examining related-party transactions. In practice, this means that significant decisions and potential conflicts should receive meaningful scrutiny, not simply formal approval. (Companies Act, 2013 – Section 177)

2. Disclosures that help shareholders make informed decisions.

Transparency is not simply about publishing more information; it is about providing the details needed to assess important transactions and potential conflicts. SEBI’s June 2025 circular on related-party transactions sets out industry standards for information to be provided to audit committees and shareholders when seeking approval for such transactions. A practical sign of better governance is whether disclosures give decision-makers enough relevant information to assess a transaction and question its terms where necessary.

3. Accountability when rules are breached.

Governance requirements are meaningful only when non-compliance can lead to appropriate scrutiny and action. SEBI’s Listing Obligations and Disclosure Requirements Regulations set out obligations for listed entities, alongside provisions addressing defaults. SEBI’s original announcement of the framework also identifies a role for stock exchanges in monitoring compliance and taking action for non-compliance. The practical test is whether potential breaches are investigated and established violations are addressed through the applicable processes.

These three signs offer a practical way to assess governance beyond the existence of policies and committees. They cannot guarantee that failures will never occur, but they help show whether oversight, transparency, and accountability are working in practice.

So, is corporate governance improving in India?

The country has developed a more comprehensive regulatory framework and more detailed governance expectations. However, the extent to which these translate into consistent improvements in board oversight and accountability remains difficult to establish. The real test lies in how effectively companies apply these safeguards when difficult decisions and potential conflicts arise.

Closing thought

Corporate governance is easy to recognise in a regulation. It is harder to recognise in a boardroom.

Its real value becomes visible when someone questions a transaction, challenges a powerful stakeholder, or insists on accountability when doing so is uncomfortable. Ultimately, whether corporate governance is improving in India depends on whether meaningful oversight, transparency, and accountability make a measurable difference.

Sign-off

That brings us to the end of this edition of The Business Hotseat. Regulations will continue to evolve, but their effectiveness ultimately depends on how seriously companies, boards, regulators, and shareholders uphold the principles behind them.

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