Role Of Institutional Investors In Effective Corporate Governance
- IJLLR Journal
- May 1
- 2 min read
Rajneesh Dubey, Assistant Professor, School of Law SVKM’s NMIMS, Indore Campus
Surabhi Aswale, Legal Retainer, Bajaj Allianz General Insurance Company Ltd.
ABSTRACT
Corporate Governance is difficult to describe as an offshoot of management studies or a separate discipline. Emerged at the backdrop of big corporate’s scam, it primarily revolves around effective management. What then would be effective management comes the next crucial question? A simpler thinking brings us to a common agreeable point that when every entity performs its designated functions efficaciously, an effective management is said to be established. However, the problem arises when one of them fails to perform or does not perform at all. Here, comes the role of checks, corporate governance thus establishes checks by encompassing the role of management, the board and the shareholders. One of the methods to restore effectiveness comes with incorporating more and more institutional investors. These while investing in chunks voice their opinion via a manager so appointed, since they form a substantial portion of company’s holding they get a place in the corporate. They themselves oversee the functioning of management and can raise opinion against management’s decision. They can force a corporate to encompass corporate governance principles. The presence of institutional investor is a guarantee of long lasting relationship of corporate with not only its investor but also with society. Incorporation of corporate governance principles not only fosters growth of corporate but also is a guarantee for effective handling of any mis-happening in the unseen future. Nonetheless, one can be assured with the presence of institutional investor that the corporate functions profoundly. This paper is an attempt to bring out what role an institutional investor plays in establishing corporate governance principles. It attempts to briefly understand corporate governance, institutional investor, associated legal framework and ends giving a guiding light towards the road ahead.
