Looking Back At The Satyam And Sahara Scandal: A Legal Scrutiny

Sejal Choudhary, B.A. LLB (Hons.), Jindal Global Law School

ABSTRACT

In recent years, the relationship between management and ownership has become the base of a modern corporation. Corporate governance entails a set of relationships amongst the company’s stakeholders which further provide the structure which sets the company’s objectives and the very means to achieve them. While companies globally are acknowledging the importance of a good corporate governance structure and its impact on their operational value, India is way behind in the standards of its corporate governance structures. One of the biggest failures of corporate governance in India was the infamous Sahara Scam. The aggressive regulatory conflict between SEBI and the Sahara Group for almost 5 years exposed an unimaginable scale of unethical operations that the Sahara Group was carrying on. Moreover, the importance of ethics and corporate governance was also brought into the limelight by the Satyam Scandal, an unforgettable corporate accounting fraud that undermined the integrity of financial reports and the Indian economy. Ultimately it is the investors, whose trust was eroded and lost in this corporate battle fuelled by human greed. Both these cases are a testament to the fact that, although companies may not necessarily be rewarded for their socially responsible actions, irresponsibility never comes without a price. This research paper taps into the pitfalls of Companies Law that essentially aided the two biggest corporate scandals in India.

Keywords: Sahara Scam, Satyam Scandal, SEBI, Satyam Scandal, Companies Act, Corporate Governance.