The Transition Towards Outsider Model: A Change In The Present Indian Corporate Governance Scenario

Arkadyuti Sarkar, LLM, Jindal Global Law School (Corporate & Financial Law and Policy)

ABSTRACT

Vast pieces of literature are already available on the infeasibility of the “Outsider model” in the Indian corporate governance scenario. The pivotal reason behind such infeasibility is the concentration of capital and majority stakes in the hands of selected few business families constituting the board of the company. However, in recent times we can notice a change in the situation. With multiple unicorn startups already booming we can notice a dynamic shift from the family influence towards outsiders’ influence in the governing board of the new era corporate entities. This transition is not an abnormal or separate incident. Even in economies, like USA and UK, where the Outsider model is presently prevalent had once the history of small family-run businesses operating under the Insider model.

In this paper we will attempt to make a brief but elaborate analysis of the ‘Outsider and Insider model’ which shall include their benefits and limitations and the pivotal differences, then we will introspect the recent transitional trend towards the “Outsider Model” in the new Indian startups and substantiate why the western “Outsider Model” based legal provisions can be beneficial in the Indian scenario. The research method shall be qualitative with a major focus on the review of existing literature on the related topics.