Fundamental Glossary / Management & Corporate Governance
Corporate Governance
The system by which a company is directed and held to account: the board, the rights of shareholders, disclosures, and the controls around management.
Formula
There is no single ratio. In India the LODR regulations, the Companies Act, and the board's own policies are the framework.
What it means
Governance is how outsiders can trust the numbers and the use of their capital. It covers who sits on the board, how related parties are treated, how the auditor is independent, and how bad news is disclosed.
Good governance does not make a bad business good. It lowers the chance that a good business is looted or that a weak one is hidden.
How to read it
Read the governance report, the related-party note, auditor comments, and promoter pledging together. One clean chapter does not offset the others.
What to watch
A policy on the website is not the practice. Resignations of independent directors, frequent auditor changes, and delays in results are the practice.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.