A nominee seat is created by contract but held under statute. Most disputes arise in the gap between the two.

Makarand Joshi  |  Founder Partner, MMJC

Nominee director disputes rarely begin at appointment. They begin when a nominator withdraws its nomination and the nominee stays; when a Board hesitates over a candidate it agreed to accept; when a reappointment resolution fails; or when someone asks whether the nominator has become a related party. By then, the answer lies in documents settled years earlier: the Act, the articles, the nomination agreement and the nominee’s terms with the nominator.

OUR POSITIONS IN BRIEF

1. Section 161(3) serves institutions, not everyone. Others must use section 152(2) or 161(1).
2. “May appoint” is not an unrestricted veto. The Board may decline a valid nomination only for a genuine legal impediment.
3. A private company can make withdrawal end the office under section 167(4). A public company cannot assume this.
4. A public company can keep a nominee out of rotation within the non-rotational third. Listed companies must also address Regulation 17(1D).
5. Fees and related-party status turn on facts, not on the label “nominee”.

1. Who can use section 161(3)?

Section 161(3) lets the Board, subject to the articles, appoint a person nominated by “any institution” under a law or agreement, or by Government in a Government company. “Institution” is undefined. A public financial institution clearly qualifies, but it is unlikely to be the limit: had that been the intent, the defined term in section 2(72) was available. Whether a fund, trust or investment vehicle qualifies depends on its facts, including, for a trust-structured fund, who actually holds the right.

A person outside section 161(3) may still hold a contractual right to propose a director. The candidate must then be appointed by shareholders under section 152(2), or as an additional director under section 161(1).

2. Does “may appoint” give the Board a veto?

Nomination does not itself effect appointment; the Board must act, and eligibility, consent and filings must be addressed. But “may” should not be read apart from a valid nomination right embedded in the articles. If the Board could reject an eligible candidate for any reason, the agreed right would become a mere request.

Read together, the statute, the articles and the company’s undertaking support a narrower view. The Board must give effect to a valid nomination, declining only for a genuine legal impediment: lack of entitlement, ineligibility, fit-and-proper requirements, or conflict with the Act or articles. It should give reasons promptly and allow a replacement. We do not suggest the section reads “shall”; only that a permissive word should not release a company from an obligation it validly assumed. In a listed company, shareholder approval under Regulation 17(1C) remains a separate requirement.

3. How does a nominee’s office end?

Section 161(3) prescribes no tenure, but a private company has a tool a public company lacks. Section 167(4) allows its articles to add grounds for vacation of office, so a valid withdrawal of nomination can be made an express ground. Properly drafted, cessation then follows without a resignation, though the company must still record the event, complete filings and manage any dispute over validity or timing. The clause should state who may withdraw, how notice is delivered and when it takes effect. That is far more reliable than “at the pleasure of” the institution.

A public company should not assume the same route. Where its nominee will not resign, it ordinarily relies on the Act’s general removal provisions and their protections.

4. Can a public company keep its nominee out of rotation?

Section 152(6)(a) requires at least two-thirds of a public company’s directors, excluding independent directors, to retire by rotation. Under section 152(6)(b), the rest are appointed in general meeting “in default of, and subject to any regulations in, the articles”. Those words let the articles place an institutional nominee in a non-rotational seat, appointed by the Board under section 161(3). Nominees have no statutory exclusion from the count, however, so if the two-thirds proportion cannot otherwise be met, a nominee may have to rotate.

Listed companies face a second layer. Regulation 17(1D) requires shareholder approval for a director’s continuation at least once every five years. Its exemptions cover, among others, court or tribunal appointees, nominees of financial sector regulators, RBI-regulated lenders under a lending arrangement, and debenture trustees. A PE fund’s or AIF’s nominee does not obviously fall within any of them, so a “permanent” seat may still face a periodic vote.

5. Who keeps the fees?

Whether the company may pay a nominee depends on the applicable provisions, the articles and approvals. Whether the nominee may keep the payment depends on the nomination arrangement, their employment terms, the institution’s rules and, for a trustee, the trust’s rules on personal benefit. Fees belong automatically to neither party, so the entitlement should be documented before they accrue. No arrangement alters the nominee’s personal duties or liability[1].

6. Can the nominator become a related party?

Section 2(76)(vii) covers a person on whose advice, directions or instructions a director is accustomed to act, subject to a professional-capacity exception. A nomination right, or a legitimate exchange of views, is not enough. A habitual pattern of voting instructions may be. If so, transactions with the institution attract related-party approvals and disclosures, with a separate analysis under the Listing Regulations. Either way, the nominee must exercise independent judgment under section 166. Protocols on information, conflicts and recusal belong in place before a contested decision, not during one.

Where we expect the debate:

We would value the profession’s view on three open questions:

1. In a trust-structured fund, is the “institution” the trust, the trustee or the investment manager?
2. If a Board refuses a valid nomination without a legal impediment, is the remedy only contractual, or is the refusal relevant in oppression and mismanagement proceedings?
3. Should the professional-capacity exception in section 2(76)(vii) extend to instructions issued under a formal stewardship or voting policy?

Most nominee director disputes are drafting problems that surface late. They are far cheaper to solve at the term sheet than in the boardroom.

This article sets out general views for discussion. It is not advice on any specific matter and does not refer to any particular company or dispute.

[1] In Dover coalfield extension ltd [1908] 1 Ch. 65 [1], the UK Chancery division held that the director was fully entitled to retain the remuneration for their services. The fees were legally characterized as payment for work done rather than a fiduciary windfall, meaning he did not have to account the same to the nominator. Whereas in Dallow vs Codd [1946] Ch 73 [2] the UK Chancery Division held that the directors were accountable for the entirety of the remuneration they received as they themselves were trustees of the nominator.

The post One word in section 161(3), and the nominee disputes it create first appeared on MMJC.

For most listed companies in India, managing unpublished price-sensitive information (UPSI) about their own securities has become part of standard governance practice. Codes of conduct, designated persons, trading windows and digital databases are now established features of the compliance framework.

A related question, which deserves greater board attention, is less consistently addressed: what happens when the business receives commercially sensitive information about other listed companies through its ordinary customer, supplier and partner relationships?

How this information enters:

Consider how a business operates. A procurement team negotiates a significant contract with a listed EPC company, and in the course of that discussion, the other party’s representatives share information about its order book, capacity or financial position. A strategy team evaluating a joint venture receives detailed commercial information about a potential listed partner. A senior relationship manager is told by a listed customer about a material change in its business plans.

To the people in these conversations, this is normal business activity. Some of the information exchanged may, in certain circumstances, be price-sensitive in the regulatory sense. The employees involved may not recognise it as such. The organisation’s existing PIT framework may not have been designed with this type of information in mind.

Why this is a leadership issue, not only a secretarial one:

The traditional PIT framework has understandably focused on protecting the company’s own UPSI from misuse. The next governance question is how sensitive information moves across the wider business ecosystem. This is not a question that begins and ends with the secretarial function.

The Company Secretary is well placed to bring this issue onto the governance agenda — as the bridge between management and the board, and as the facilitator of a broader conversation. But effective governance around third-party information flows will involve management, sales, procurement, strategy, legal, technology and risk functions working together.

This reflects a broader principle in how information governance is evolving: good governance is not about being the most restrictive. It is about ensuring that the right controls apply to the right information at the right time.

What the regulatory architecture suggests:

The legal framework provides useful context, though precise application requires expert advice in specific circumstances. A decision of the Securities Appellate Tribunal has established, as a matter of principle, that information sensitivity is not determined by organisational affiliation — the source of UPSI and the company whose securities are traded need not be the same entity as the insider’s employer. Regulation 9(2) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 covers persons required to handle UPSI in the course of business operations. Regulation 9A addresses internal controls under the PIT framework, with oversight obligations on the CEO/MD and audit committee. The application of these provisions to third-party UPSI received through ordinary commercial activity has not been definitively settled, and specific legal advice is recommended.

From a governance standpoint, boards need not wait for regulatory certainty before examining whether their existing frameworks reflect how information actually moves through the business.

What proportionate governance looks like:

Proportionate information governance starts with understanding where the exposure actually sits — not with a new compliance layer. The question is where third-party UPSI can realistically enter the organisation, which functions are most likely to encounter it, and whether existing controls account for those flows.

A useful starting point is to map exposure rather than to assume it is covered by existing frameworks. Business relationships that involve listed counterparties — as customers, suppliers, project partners or strategic targets — may be more extensive than the existing PIT framework was designed to address.

Three actions for management are worth prioritising: mapping realistically where third-party UPSI can enter; identifying the functions most likely to encounter it; and testing whether existing controls address those flows.

The institutional question:

The deeper question is one of institutional trust. Can a listed company be trusted with sensitive information that comes to it through the normal conduct of business? That is increasingly a governance, culture and business-discipline question — and it belongs on the board’s agenda.

Beyond the highlights — explore the complete article at the link → Click here

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1. Changes in Ownership Structures:

India is witnessing a massive transition from promoter-led ownership to institutional investor-backed models, completely shifting the compliance paradigm. Where family-managed companies once relied on trust and informal, need-based documentation, investor-managed businesses demand strict policies, robust processes, clear rationale, and thorough record-keeping.

Furthermore, Indian promoter shareholding has largely transitioned from individuals to trust entities. This requires compliance officers to master the legal nuances of multiple jurisdictions. Without this deep understanding, navigating essential tasks like share transmission, Significant Beneficial Ownership (SBO) identification, and promoter group classification becomes impossible.

Similarly, new-age startups often lack a single controlling group, creating legal ambiguities. Regulators have yet to fully address questions like: Who is the actual promoter—the founder or the investor? Who exercises real control or significant influence? Can an individual with minimal economic interest still trigger SBO compliances? Compliance officers must proactively navigate these gray areas.

2. Changes in Business Models:

These ownership shifts, coupled with market disruptions, make business models highly volatile. This volatility makes financial forecasting unpredictable, causing threshold-based compliance requirements to fluctuate rapidly. Sectors like fertilizers, data centres, IT, and automobiles are undergoing massive structural shifts. These changes trigger reorganizations, altering management structures and re-designating key personnel under corporate and insider trading laws.

As business models shift, the definition of Price Sensitive Information (PSI) becomes highly dynamic. While regulators might only scrutinize these actions years later, compliance officers must pre-empt risks and align internal frameworks immediately. These shifts often spark mergers and restructuring, which disrupt reporting lines and lead to sudden executive turnover. This requires immediate regulatory filings and a concerted effort to induct and train incoming management. Additionally, corporate restructuring constantly alters the matrix of Related Parties and Related Party Transactions (RPTs), increasing the compliance burden. The compliance officer cannot be a passive spectator; they must be the strategic architect of agile compliance frameworks.

3. Changes in Memorandum and Articles of Association:

As these business models and internal structures reorganize, they inevitably demand immediate alterations to a company’s foundational legal charter. Consequently, the days when the Memorandum of Association (MoA) was referenced only in exceptional situations are gone. Dynamic business pivots mean the MoA must be reviewed and updated frequently. Similarly, the shift from promoter-led to investor-funded organizations requires significant overhauls of the Articles of Association (AoA) to govern new corporate behaviors. Compliance officers must meticulously draft these documents to prevent conflicting interpretations. As department leaders, they must also ensure their teams fully grasp the practical interplay between these foundational documents.

4. Changes in Capital Structures:

The revisions made to these constitutional documents are often driven by a fundamental shift in how corporations fund their growth. Despite India’s steady GDP growth of 6–7%, capital raising has surged over the last few years, fundamentally altering debt-to-equity ratios across industries. Decades ago, a 1:3 ratio was standard. Today—outside of capital-intensive sectors like infrastructure and aviation—equity capital has significantly outpaced debt. While this provides corporate stability, it compresses the return on capital, changing the entire corporate risk dynamic.

With companies launching more capital issues than ever, compliance professionals must adeptly manage these complex transactions. Simultaneously, regulatory processes for issuing capital have become much stricter. Decisions regarding pricing, timing, and investor selection must be thoroughly documented and justified to pre-empt future litigation or shareholder allegations.

On the debt side, banks are competing fiercely for deposits, the government is heavily promoting debt securities, and foreign currency loans are increasingly accessible. This environment requires a distinct compliance mindset focused on debenture trustee compliances, debt listing requirements, foreign exchange regulations, and insolvency risks. As banking transitions toward digital lending and NBFC-dependent models, lender priorities are shifting. Compliance officers—whether representing the lender or the borrower—must align their governance practices with the changing expectations of regulators, investors, and creditors. These expectations manifest in stricter asset-liability mismatch monitoring, enhanced CARO reporting, evolving credit rating parameters, and new pooled investment vehicles. Positioned correctly, this environment offers a massive growth opportunity for the profession.

5. Changes in CXO Tenures:

This continuous influx of external capital and the resulting demand for performance place intense pressure on executive management, fundamentally reshaping leadership stability. The era of lifelong, committed corporate executives is fading; attrition rates at the CXO level have risen sharply. In top-down corporate structures, this churn creates high volatility. As Indian companies transition from promoter-managed to professionally run enterprises, the fierce demand for talent has led to shorter CXO tenures and more transactional board expectations. For the compliance officer, this means the organization’s compliance culture must be institutionalized. It cannot depend on individual business leaders. It requires an agile approach to onboarding changing leadership, paired with an uncompromising stance on core governance frameworks to protect the corporate entity.

6. Changes in Talent Pool and Retention Strategies:

When leadership at the very top becomes highly transitional, it ripples downward, forcing a total rethink of how the entire professional talent pool is developed and retained. The supply of professional talent is shaped by shifting academic frameworks and societal perceptions of the profession. Conversely, demand is driven by increasing legal complexity, stricter enforcement, litigation, and technological disruption. To thrive, compliance leaders must embrace advanced regulatory technologies while aggressively investing in human capital. Understanding the evolving beliefs and workplace behaviors of younger generations, mapping them to industry expectations, and building robust learning and development structures is now an urgent priority.

Conclusion: Unlearning for Effective Adaptability:

While compliance deals with a defined universe of statutory laws, the execution of those laws must adapt to volatile macroeconomic factors. Therefore, unlearning past methodologies is critical. What succeeded yesterday guarantees nothing for tomorrow. Because the human brain relies naturally on familiar memories and patterns, intentional unlearning is the hardest hurdle to clear when trying to adapt. Compliance professionals must master this mental shift—maintaining operational peace while executing dynamic, deeply reflective governance strategies.

This Article written by

CS Makarand Joshi – Founder Partner,

Founder Partner, Makarand M. Joshi & Co

The post Navigating Corporate Governance in an Era of Disruption first appeared on MMJC.

Success at any cost vs. Success within framework!

In today’s world where our political leaders and OTT platforms are telling us to succeed at any cost, even if it is illegal it doesn’t matter! It is bound to impact the morale and ethics of common man. If you do not get success, easy way to challenge is to cross the boundary of legality. But in TITAN, when their factory is denied with license, they figure out a smart innovative but legal way. Tatas were ready to offer 28% of equity to state for that matter !!! This is a classic. In fact, the birth of TITAN is to eliminate the need for smuggling of watches! The need for business itself was triggered by opportunity which kind of eliminated wrong doers! This is a classic blend of aggression for a legitimate wealth creation.

A business which demanded skilled labour and local talent of fine work getting trained to make watches. Today – we talk about ESG, what an amazing way for inclusive growth and distribution of wealth by empowerment. In fact, TITAN is not just a story of start up but a social start up which became a GLOBAL LEADER.

Fear of Losing to Freedom to Fail

In a society where failure is punished, where failure attracts personal liabilities to directors and fiduciaries [even if there is no fraud], someone standing out and saying, ‘you invent and I give you freedom of failure!’ is the mantra which all corporates and Government need to cherish! India will not become superpower if business is worried that their business which was legal becomes illegal retrospectively! Or if they fail in legitimate business their personal assets can be attached [although they have started business in limited liability entity] and that too without any fraud element[i] Tatas gave freedom of failure to TITAN team and that’s why they could dear to create something so adorable. INDIA not only needs compliance related exemption to start ups but also a relief from personal liabilities of promoters if there is no fraud. India needs an IBC which will allow companies to close if they are not successful[ii].. Not every promoter will be TATA Sons and therefore not every management or professional director will get back-ups which TATA companies got. For example, Tata Sons continued to support strategic businesses such as Air India despite significant losses. This reflects that, in large regulated or strategic sectors, initial losses may be supported where the promoter has long-term capital commitment and turnaround intent with national interest as priority.

Courage and Commitment

In this web series we observe that Chairman of the Group, Managing Director of the Company and his core team refused to wear watch until world class watch is manufactured in their factory. How many times would you see a group chairman, Managing Director and Core Team commit something like this! This is the skin in the game. This is the courage and commitment! When stakes are so high in terms of personal sacrifice success is bound to come.

Many a times we want something but like they say do we have ardent desire? Are we ready to pay the price for it? Are we ready to put things at stake for achieving our goal? And do we respect our value system at any cost in that journey? If India wants to become a world leader, we must inculcate each of this and much more.

Content – Content – Content

What content we consume will determine our behaviour and destiny, otherwise it is just garbage in garbage out. In our childhood time we read AMAR CHITRA KATHA. We read stories of real heroes who were courageous and ethical. Our idols were ideal. But when we grew up, we saw angry young man who is believes in revenge and now stories of scamsters being glorified. India need content like TITAN story like Bhag Milkha Bhag like Merry Kom. Since OTT has reached home and it has almost replaced traditional television channels, we need more content on that and on social media and even in mainstream media. Compliments to producers, directors and actors and entire team of this movie.

[i] section 89 of CGST Act, 2017

[ii] Approximately 2022 companies are waiting for their resolution order. Source: IBBI newsletter  Jan – march 2026

The post For 2047 – we need more content like – THE TITAN STORY first appeared on MMJC.

They say India just prioritised moderating petrol and diesel prices in India and completely skipped the need for gaining energy independence/ energy security, they say India did not focus on positioning itself in AI, they say India does not prioritise spending on R & D and therefore India remains only an outsourcing hub. But the real question is why?

Are our policy makers and corporates not wise enough? Or is there something else?

Today Or Tomorrow

There is a saying “purpose of any business is to make profit and today and all the time in future…”

While focusing and ensuring that this and next quarter is good, are we compromising our future? This dilemma or clarity decides the fate of countries, corporations and firms. Too much focus on future can drag business/ profession to insolvency and too much focus on today can make business irrelevant at any moment. Wise advisors say allocate at least 10-15% of your surplus in futuristic investments and 5-10% on experimental subjects. As one starts seeing results and opportunities this % keep changing and soon futuristic investments can either become mainstream business, or it gets abandoned. Continuous monitoring of this balance and returns thereon should be KRA/ KPI of at least a few in the organisation. At least someone very important in the organisation should be incentivised to take care of future.

Sustainability – Design and Incentives

Many times, Sustainability is confined to only environment. But sustainability is much broader than this. And therefore, desire to sustain even after 5-10-15-25 years supported by action plan and disciplined to walk on that path is the key is what history tells us. Solution lies at two levels – ONE at design level and SECOND at incentive level.

In today’s corporate world, professional CEO is appointed by a single term of 3-5 years and even Independent Directors are allowed to serve on board for 5 years unless reappointed for next one more term. And therefore, while I have seen many individuals who carrying trusteeship bearing, design is not incentivising to look beyond immediate period of 3-5 years. In a listed company even, investors may not be long term; and therefore, role of regulator becomes very critical at design level.

Individuals and group work on their instincts which are triggered by incentives. Founders may, unknowingly, give more weightage to their position, identity or ego rather than sustainability of the organization. Therefore, incentives need not just be towards monetary, like Maslow says, at lower level it would be for survival and at highest level it will be for self-actualisation. And therefore, as a society while we need a design which facilitates balancing of long term and short term, we also need a complete framework of incentives for each stage.

Moment of Change

For an individual, organisation and even a society we need to appreciate the concept of moment of change. Andy Grove called such moments “strategic inflection points” – points at which the fundamentals of a business are about to change.
The tragedy is not that change happens. The tragedy is that many institutions recognise it only after their old success formula has expired.

While each of us is busy in living life as it comes, and behaviours are triggered by designs – incentive framework provided by someone else, our conscious needs to develop to grasp, grab and respond to moment of change. In evolved business families it happens at family level. But for society in general, this is possible if we bring this awareness and conditioning at least in graduation phase [if not in schools].

Moment of change is an important concept which is practiced in sports. They are trained to adopt to these moments, only then they can become successful. At a start-up stage winning credibility to your solution is ask, but when you win credibility, scaling is an ask which requires different mindset and design. And at grown stage, while maintaining new creation and scaling, resilience becomes more important. In corporate world, resilience is sometimes equated with risk mitigation and crisis management. Many corporations who fail to understand and respond to this moment of change eventually decline.

Reflection in Professional Life

‘What took you here will not take you there…’ In professional life and firms those who have these abilities can grow – sustain – bounce back. In a life which is engaged, attacked and influenced by social media, AI and Technology, consciously allocating digital free time and space to reflect becomes critical. Such space and time will show us these moment of change and will allow us to design and incentivise our eco systems to take care of sustainability of today and all the time in future.

Hope you have allocated space and time this weekend for reflection!

The post Recognising Moment of Change! first appeared on MMJC.

Darwin says, ‘survivor of fittest’ and history tells us that civilisations and cultures sustain much longer than an individual or kingdom or religious supremacy. Survival is biology. Sustainability is strategy. Similarly, when we see if we see organisations / institutions, longevity and success in business is not luck; it is disciplined alignment with purpose. And Indian corporate laws provide that design which can facilitate and even push for strategy which will lead to sustainable success.

In last 2 decades number of companies which have successfully got listed have been increasing consistently viz. from 48 in 2007 to 372 in year 2026. Overall market capitalization of Indian corporates have increased from ~1,01,49,290 Crore in FY 14-15 to ~4,13,75,586 Crore in FY 24-25, so wealth creation engine via companies going for listing is amazing contributor for India Growth story. India’s growth story is not written in GDP numbers alone; it is written in listed companies. Our Prime Minister has kept goal of Vikasit Bharat by 2047 i.e. GDP of USD 30–35 trillion, this will need market cap of listed companies to minimum ~₹3,400 Lakh Crore which is 8-9 times more than today. There is no doubt in mind of anyone that if India has to grow, entrepreneurship and number of successful companies is the major lever for achieving this.

But growth is never a straight line; it is a battle between upward forces and downward pulls. Success depends on one equation: strengthen what lifts you, weaken what pulls you down.

Number of companies which were dragged in insolvency has also been significant 8833[1] and almost 8-10% top 500 companies went through IBC in last 10 years. Companies don’t fail in one moment, they drift away from discipline and markets don’t reward the biggest companies, they reward the most consistent ones.

My belief and experience is if regulations are followed in spirit, it gives strength and will lift the company up. From this context, successful IPO is not just capital raising, but character revealing. Listing is not an event; it is a transformation.And preparing for IPO and adopting regulations in right manner plays a very strategic role for corporates to assure sustainable success for corporate and every stakeholder. This is need of nation. In this article we are sharing some elements which contribute to sustainable success.

1. Investor engagement/ making yourself attractive for investors

Stock market works on future pricing. Stock Market likes consistency. Stock market like transparency[2], stock market expects respect[3], stock market expect best in class, stock market likes evolved corporates[4]. Stock market expects discipline. The stock market doesn’t just price your business, it judges your behaviour.

Management has to mature to a role and to a mindset where they appreciate that they cannot assume public shareholders and they need to be disclosed whatever is necessary to take them informed decision. Whatever needs their approval cannot be circumvented. Once listed, the company stops belonging to the promoter and starts belonging to trust.

Investors needs sustainable growth either through promoter or someone who is most appropriate at that pace for the company. And therefore, after listing, corporation cannot be considered as alter ego of a promoter but a separate identity. Ego builds companies, but governance sustains them. Therefore ability to have meaningful engagement with investors and to earn qualities, culture, practices, processes, systems and performance that will keep attracting investors at attractive pricing is essential.

2. Resource mobilisation and Deployment

Those companies who go for road show learn so much about their business which they would otherwise not learn even if they spend years in their business. Roadshows don’t just attract investors, they expose blind spots.

Capital markets are not just funding platforms, they are capital allocation judges. If we see distribution of capital across industries has been changing

Table 1: Capital Deployment across industries[5]

Listing and capital market provides continuously evolving framework for effective capital deployment and discipline in its utilisation. Smart capital flows to clear thinking and you will sustained companies have adopted to these expectations and maintained their share in capital market. Success of fund raise is directly proportional to objects of the issue and therefore smartest people on earth decide the capital allocation and retail market follows that. Further, it requires quarterly monitoring and reporting to public about utilisation[6].

One of the reasons why Indian capital market lagged globally is because of multiple factors, but few important factor are our inability to create alternate source for energy and lack of speed and focus on AI[7]. In short, if you want to be ahead of curve in business you need to invest funds at right source and Your investors are your most honest performance dashboard.

3. Discipline

“Success is nothing more than a few simple disciplines, practiced every day.” – Jim Rohn

In fact, being compliant is nothing but being disciplined. Many corporates avoid listing because they are afraid about compliance and compliance cost. Undisciplined success is temporary. Disciplined systems create permanence. Listing forces discipline, resisting it invites decline.

Being listed requires complete mapping of business with confidentiality, disclosure and monitoring conflict of interest across width and breadth. This puts very high level of engagement, alignment and discipline. This one virtue requires to be acquired by any corporation which wants to list. Without this virtue even if any entity lists, it runs a risk of heavy non-compliance which can even put the survival at stake and if mastered, this can guarantee long term and sustainable success.

Be it compliance of related party transactions[8], or related to senior management[9] on boarding or mapping of price sensitive information across organisation[10], putting perfect systems for seamless flow of information across organisation and putting adequate controls and levers to ensure speed of decision with adequate risk mitigation[11] is so critical for successful organisation and listed compliances exactly expect this. These processes and discipline to follow this requires compliance/ regulatory teams, embedding these aspects in every job descriptions and evaluations, investment in systems / processes and review. And while recognising and rewarding the performers any non-performance needs to be tracked and punished ruthlessly. In last 20 years ~13000[12] companies/ individuals got penalised by stock exchange or by SEBI and there are ~7,500+ number of listed companies, this proportion speaks volume about expected disciplined by a listed company in India. Ultimately, we are not running a proprietary concern but a large corporate. What you don’t monitor will eventually control you.

4. Risk

Between success and sustainable success there is one fulcrum which decides the direction, that is risk identification, management and mitigation.

Corporate laws are so vocal about risk[13]. In fact, if there is frequent movement or instability in chief risk officers, price and trust on that corporate impacts. One biggest risk for any corporate is about having weak financial controls and low engagement of auditor vis a vis board of directors. NFRA has been empowered in recent time to come out with more directions on this[14]. Whistle blower, vigil mechanism and protection of whistle blowers has been agenda of regulators and for a evolved corporate it requires strong structure around this[15]. For being listed mastering these aspects is so crucial. Risk based approach of working is so crucial for sustainable success that risk is a subject in almost every graduation and post-graduation. If we want to reduce power of forces which will pull performance of company down, focus on risk is crucial. In recent time when there was accident in one manufacturing facility there was discussion about role of risk committee of that company[16], if corporates are able to invest and prioritise and manage risk appropriately, it will definitely create sustainable wealth for investors. Risk ignored doesn’t disappear, it compounds silently. A weak control environment is a delayed crisis.

5. Conflict of interest

“All great empires die from within.” — Terry Bradshaw

In history we will see several examples of decline of any business or any empire is because of conflict of interest of the ruler/ decision maker. Lack of discipline in handling any conflict of interest is biggest spoiler.

Corporate law has mechanism to map every conflict of interest be at supplier level or customer level[17], or at senior management level[18] or at director level or at investor level[19]. LODR very nicely balances material and non-material conflict of interest. While every transaction with entity where there is some conflict of interest is required to be approved by independent directors only[20] that too only after receiving full and relevant details[21], when it comes to high value transactions involving conflict of interest it can be approved by shareholders who do not have any conflict of interest[22]. This is so strict that out of all such approvals 20% transactions were recommended to be voted against by proxy advisors and 2% transaction could not go through because of this framework in last 5 years. This framework gives so much confidence about robust mechanism to regulate conflict of interest. In last 9 years there are 4 to 5 amendments in regulations which deal with conflict of interest.

Such discipline makes it clear that regulator is very alert and strict about these aspects. In fact, if not followed properly it can trigger debarment of directors from acting as director in that and other companies for five years[23].

This encourages corporate to devise structures which does not have conflict of interest or transactions should be convincible for investors to vote in favour of such transactions. The market forgives mistakes not misalignment.

6. Inclusiveness

Jesse Jackson says “Inclusion is not a matter of political correctness. It is the key to growth.” And Magic Johnson says “The way to be successful is find a way to be inclusive of everybody…” In short without being inclusive, success and sustainable success is not possible and LODR exactly expects this from listed companies. Any culture which is exclusive cannot sustain long.

In fact, LODR not only insists corporates to adopt policies which will facilitate inclusiveness[24], it also insist disclosure of inclusiveness in its annual report[25]. ESG rating declared by ESG Rating agencies indicate how inclusive an organisation is. More and more money, more aware customers and more talented manpower and government subsidies and recognition is not possible without corporation being inclusive. These frameworks requires adopting best practices and because of overall push and pull from investors and regulators corporates will have to become inclusive and they have to ensure that perception is also matching with this. Talent, capital, and trust flow towards inclusive organisations. Exclusivity limits scale: inclusivity multiplies it.

7. Confidentiality, Transparency and Communication

“Don’t speak until its done” this is the simple thumb rule of SEBI Prohibition of Insider Trading Regulations, 2015. Once you are listed a company and its every connected person has to master this science of maintaining confidentiality till event occurs and then complete transparency upon happening of event. This is a habit changer for many corporates. But it is sign of evolved business and person. In last 7 years ~40 companies and ~100 individuals have been penalised by regulator for this violation and total penalty levied is ~36 Crore Rupees.

If any news is published before the formal disclosure done by the company then company has to respond to this immediately[26]. While communication with companies may want to talk liberally about good news, tendency is to speak less about bad news. Once you are listed, you are supposed to be like सुखदुःखे समे कृत्वा लाभालाभौ जयाजयौ II2.38II of Bhagwat Gita. This means whether news is good or bad we should be indifferent and we should see both from equal distance. This is sign of very evolved, fearless and detached persona. When it comes to peace and excellence this is a sign of epitome. Corporates have to earn this before going for listing. Listed companies will have to develop mechanisms to engage and communicate effectively with stakeholders so that news/ announcements are not interpreted to create dis proportionate consequences. Company needs to invest well in communication and investor / public relations.

8. Wealth creation models

Your ability to run business and make profit gives you X and stock listing can give you 10/20/30/50 X for the same profit[27]. Business creates profits. Markets create wealth. Listing converts performance into multiples. The biggest wealth creation engine is not earnings, it is valuation. Shares of a good listed entity is amazing wealth which you can pass on to your successor.

Likewise for employees also ESOP is amazing wealth creation enabler. In fact, ESOPs are no longer merely incentive tools but have become meaningful wealth creators e.g. Vedanta Ltd. alone has reported over ₹2,500 crore of employee wealth creation through ESOPs over a five-year period, reflecting the scale at which value can be shared with employees. Plus, best part is compensation is done by the market and not by the company. ESOPs don’t just compensate employees, they align destinies.  And therefore, coming out with ESOP scheme for employees before listing OR aligning family for share ownership and distribution post demise of founder promoter is very crucial. Many promoters keep their successor tied together via family trusts. As per Prime Database, as on October 2025, among the 2,757 companies listed on the NSE, promoters of ~880 of these companies hold their shares through different trust structures- private, public or Family Trust. This is a great enabler for keeping company control intact while retaining economic benefits for successors. This needs to be mapped before listing and post listing this can create wealth for everyone.

9. Proprietary /Arbitrary approach to Policy based Approach

Put together Companies Act and LODR requires listed companies to adopt ~26 policies ranging from policy related to manpower – compensation – reward – succession – diversity TO policies monitoring conflict of interest or policies on investment and risk mitigations etc. This speaks volumes. This insists corporates to be able to frame long term views and positioning and to be thoughtful about their choices.

Proper framed policies develop culture, give autonomy, cultivates speed with thoughtfulness and alerts about expectations of various stakeholders.

Policies help corporates to maintain alignment of every stakeholders towards corporate vision-mission-goal-values. Policies also provide framework which will make job of executors seamless and increases accountability of every stakeholder.

Policies if weaved properly can be effective replacement of most brilliant and evolved human beings with a very common man at execution level. This is amazing tool and corporate laws expect migration of corporates from arbitrary/ proprietary decision making to policy-based functioning. Number of courses available on policy making in management schools are increasing and this clearly indicates need of Indian corporate world.

10. Moving towards evolved and responsible corporate

GOAL of any organisation is to make profit today and all the time in future and LODR and companies act if implemented in letter and spirit actually promises this. It is a role of company secretary not just to ensure the compliances are done but also to ensure that it is implemented in a manner which transforms company into very evolved corporate.

Conclusion

Whether you list or don’t list, imbibing these highest level of polices, practice, processes, culture and attitude makes any company and its ecosystem a very matured, efficient, effective and sustainable. Listing is optional. Maturity is not.  Sustainable success is not achieved by chance, but by design. Regulation is not a burden; it is a blueprint for excellence. Great companies don’t comply with laws; they evolve through them. Role of company secretary is not just to ensure compliance but to ensure that true benefit of these regulatory expectations transform those companies into a evolved organisation which sustains for hundreds of years

[1] Care ratings IBBI data .

[2] There are almost 37 TYPES of disclosures required under reg. 30 and approx. 61 types of disclosures under LODR

[3] Listed cos generally quarterly calls after publication of fin. Results. They also conduct quarterly calls post disclosure of significant events.

[4] There are some index such as ESG ratings by NSE (https://www.nse-esgrating.com/esg-ratings ), BSE 100 ESG Index, S&P ESG India Index etc, which  and S&P BSE 100 ESG Index. These indices help investors identify ethical firms, promote better corporate governance, and attract sustainable capital.

[5] IBEF 

[6] Reg 32 of LODR provides for quarterly updates on statement of utilisation of funds raised through public issue. Monitoring agency report is also provided if fund raising exceeds

[7] India’s crude oil import dependence (~87–88%), coupled with a fossil fuel–dominated energy mix, underscores a structural reliance on external energy sources despite ongoing transition efforts.
(Source: Energy Statistics India 2026, MoSPI) .

https://www.niti.gov.in/sites/default/files/2023-03/National-Strategy-for-Artificial-Intelligence.pdf

[8] Regulation 23(4) of SEBI (LODR) Regulations, 2015

[9] Regulation 17A (1) of SEBI (LODR) Regulations, 2015

[10] Regulation 3(5) of SEBI (PIT) Regulations, 2015

[11] Regulation 21(4) of SEBI (LODR) Regulations, 2015

[12] Orders of SEBI chairperson/members, orders of SEBI AO and Quasi-Judicial Authorities from 1 January 2020 to 22 April 2026

[13] section 134 of cos act, 2013 and Reg 21 of LODR, Reg 34 of LODR

[14] Corporate Laws Bill 2026 arms NFRA with sweeping enforcement powers, penalties

[15] Reg 22 of LODR provides for listed entity to formulate a vigil mechanism / whistle blower policy for directors and employees to report genuine concerns.

[16] The National Green Tribunal, in In re: Gas Leak at LG Polymers (2020), found prima facie failure of safety systems and imposed strict and absolute liability on the company, directing deposit of ₹50 crore and constituting a high-level committee to examine lapses and preventive measures.

[17] 2(1)(zc)(ii) of LODR defines related party transactions to mean a transaction between listed entity and any other person or entity on the other hand, the purpose and effect of which is to benefit a related party of the listed entity or any of its subsidiaries.

[18] Reg. 26 (3) and (5) of LODR

[19] Reg 26 (1), (2) and (3) of LODR

[20] Members of audit committee who are independent director shall approve related party transactions.

[21] RPT ISF June 2025: management of listed entity shall provide information in format specified in RPT Industry Standards.

[22] Regulation 23(4) of LODR: no related party shall vote to approve such resolutions whether the entity is a related party to the particular transaction or not

[23] Section 164 of the Companies Act, 2013

[24] Regulation 17(1)(a) of SEBI (LODR) Regulations, 2015

[25] Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015

[26] Regulation 30(11) of SEBI (LODR) Regulations, 2015 read with Point 4 of Sch A of SEBI PIT Regulations: Prompt dissemination of UPSI that gets selectively disclosed.

[27] P.E of Sensex is 21.63 – BSE website

This article is published on taxmann link below.

https://www.taxmann.com/research/company-and-sebi/top-story/105010000000028367/positioning-ipos-strategically-long-term-success-mantra-opinion

The post Positioning IPOs strategically: Long Term Success Mantra first appeared on MMJC.