As it was briefly stated earlier, corporate governance has been much talked about in India particularly after 1993. Liberalization brought mixed results for Indian economy. Noticeably, it brought in its wake a spate of corporate scandals. Later on scores of companies made public issues with large premium and then disappeared; prospectus misled the public. The management of most of these companies diverted funds and investors had no option but to repent their lost money. Primary market literally collapsed in the after math of these failures. Slowly, many a family owned businesses moved to become widely held limited companies. The question, how to function in a corporate setup overriding family interest and obligations called for a code of governance. Similarly, corporate banks also came under strain due to scams; governance failure was total. 

The story of UTI is also well known where millions of small investors lost their capital due to inadequate management practices and weak supervision.

Auditors were following questionable accounting practices on behest of the management and often advising on how doubtful accounting choices might be made so as to remain on the right side of law and at the same time, escape detection by users of financial information. All these factors put strong pressure on many corporates to evolve a good governance practice.

Over the period of time in India companies like Tata Group, Infosys, Wipro have evolved sound principles of governance, intertwining corporate governance with social responsibility. These companies have become global and it is common to find global norms of accounting and disclosure being followed in these corporate houses. Rights of employees, stock options, independent directors, meeting quality norms, price warranty and guarantee- all these have made room for quality governance. Managers have indeed become trustees of shareholders.

It began in 1998 with the Desirable Code of Governance- a voluntary code published by CII, and the first formal regulatory framework for listed companies, established by the SEBI in February 2000, following the guidelines enunciated by the Kumar Mangalam Birla Committee Report. On 21st August, 2002, the Department of Company Affairs under the Ministry of Finance appointed Naresh Chandra Committee to examine issues pertinent to governance. The committee looked into financial and non-financial disclosure and independent auditing and board oversight of management.

Apart from financial compliance or disclosure, the independent oversight of management is also important. Many companies have disappeared, vanished either due to fraud or poor quality of board resulting in lack of independent oversight. The Kumar Mangalam Birla Committee focused on the role of independent and statutory auditors and also the role of the board of directors.

SEBI constituted a committee on corporate governance under the chairmanship of Sri N. R. Narayana Murthy. The committee included representatives from the stock exchange, chamber of commerce and industry, investor associations and professional bodies, which debated on key issues related to corporate governance. Findings and recommendations of these committees are discussed in the later chapter.

Thus we find that the corporate India is going through a great churning phase. New aggressive companies are doing business with global ambitions, placing a lot of emphasis on governance and transparency. FIIs are very serious about good governance and disclosures. Liberalization brought great challenges, after initial jolts and pain of restructuring, companies are seeing profits more than before.