On 21 August 2002, the Department of Company Affairs (DCA) under the Ministry of Finance and Company Affairs appointed a committee under chairmanship of Shri Naresh Chandra to examine various corporate governance issues.
The committee has been entrusted with analyzing and recommending changes if necessary, in various areas, like, statutory auditor-company relationship, independence of auditing functions, certification of accounts and financial statements by managers and directors, adequacy of regulation of chartered accountants, company secretaries, and cost accountants, and other similar statutory oversight functionaries, the role of independent directors, etc. The committee recommended detailed regulations on auditor’s independence, working of audit committees, board composition and governance.
The recommendations have also been drawn from The Sarbanes-Oxley Act, 2002, of the U.S.A. These recommendations have been widely debated in public domain. If implemented, they may bring sweeping changes in governance systems in Indian corporates. The same committee is also examining governance issues related to private companies in India.