CRITICAL ANALYSIS ON CLOSING THE GOVERNANCE GAP: ENFORCEMENT DEFICITS, STRUCTURAL VULNERABILITIES, AND THE REFORM IMPERATIVES OF INDIA’S CORPORATE GOVERNANCE ARCHITECTURE

AUTHOR – VIJAYENDRA SAEE* & MS. K. KEERTHANA**

* STUDENT AT SCHOOL OF LAW, VELS INSTITUTE OF SCIENCE, TECHNOLOGY AND ADVANCED STUDIES (VISTAS)

** ASSISTANT PROFESSOR AT SCHOOL OF LAW, VELS INSTITUTE OF SCIENCE, TECHNOLOGY AND ADVANCED STUDIES (VISTAS)

BEST CITATION – VIJAYENDRA SAEE & MS. K. KEERTHANA, CRITICAL ANALYSIS ON CLOSING THE GOVERNANCE GAP: ENFORCEMENT DEFICITS, STRUCTURAL VULNERABILITIES, AND THE REFORM IMPERATIVES OF INDIA’S CORPORATE GOVERNANCE ARCHITECTURE, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (6) OF 2026, PG. 415-426, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/IJLRV6I642

ABSTRACT

Corporate governance in India occupies a paradoxical position: a statutory and regulatory architecture that bears close comparison with leading international standards coexists with a recurring pattern of governance failure that exposes deep structural and enforcement inadequacies. This article advances a critical, reform-oriented analysis of the Indian corporate governance framework, focusing on three interconnected structural vulnerabilities: the persistent compromise of board independence arising from promoter dominance and appointment-capture; the inadequacy of audit oversight mechanisms as demonstrated by successive corporate frauds; and the systemic misuse of related-party transactions as instruments of minority shareholder expropriation. Drawing upon the Companies Act 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Insolvency and Bankruptcy Code 2016, and landmark judicial pronouncements of the Supreme Court, the article situates these vulnerabilities within the theoretical frameworks of agency theory and stakeholder theory. It identifies the central lacuna in India’s governance programme as a structural enforcement deficit — the failure to translate formally adequate legal norms into substantive governance outcomes. The article further examines the contribution of judicial decision-making, institutional investor engagement, and recent regulatory developments including SEBI’s revised related-party transaction framework and the Business Responsibility and Sustainability Reporting regime to governance effectiveness. It concludes with targeted normative recommendations addressing independent director appointment reform, audit committee empowerment, related-party transaction governance, and enforcement architecture, arguing that India’s governance trajectory must shift decisively from a compliance orientation towards a culture of substantive accountability if the aspirations of the corporate governance reform programme are to be meaningfully realised.

Keywords: Corporate Governance; Companies Act 2013; Board Independence; Related-Party Transactions; Enforcement; Promoter Dominance; SEBI; Audit Oversight; India.