GCSR 2007

CORPORATE PERFECTION THROUGH CORPORATE

JUSTICE

SECRET OF CORPORATE PERFECTION

Let World Council guide and lead

Preach and teach basis of need
Identify and emphasise value of deed
Adopt and practise Justice as creed

Follow Nature; enough potential to feed

Read Nature’s Economy and naturalise greed
Cast out unnecessary and superfluous weed
From malpractises Corporate Sector be freed.

Corporate Governance should not be confined to empty formalities but it should have the
substance of Corporate Justice and aim at Corporate perfection for which Corporate law can
provide strong base and balance need and greed.

A. CORPORATE POLICY: NEED FOR A UNIVERSAL APPROACH

1. Corporate Governance calls for a universal approach as differences in Corporate Laws of

various countries have resulted in distortions in Corporate Order. To bring about balanced
Corporate Governance assessed on ideal norms, it becomes necessary to evolve a perfect
WORLD CORPORATE POLICY which should provide for natural, balanced and perfect
principles of corporate law to govern and guide all bodies corporate in varied and diverse
circumstances, situations according to type of culture and customs. Principles of corporate law
should get naturally evolved and adapted to the needs of time. Want of any world corporate
policy is the outcome of lack of Vision of Reality and Mission of Justice to the world
population which should provide sustenance and basis for the very existence of World Council.
Only PERFECT CORPORATE POLICY can serve as a guide for formulation of PERFECT
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CORPORATE LAW. Such law should be modelled and finished to lay a Perfect Corporate Base
to serve as a foundation for a balanced blend of architecture and design, law and justice, finance
and economy, sickness and treatment, and direction and execution.

2. Such Policy would provide Corporate Highway for other nations to tread upon and adopt similar
law in order to pave way for Universal Corporate Fraternity, Mobility and Uniformity in
Corporate Law and Practice so as to create UNITY OF UNIVERSAL CORPORATE
EXISTENCE; which should be sustained by maintenance of pristine purity of corporate organs to
prevent Corporate pollution and attendant infection to other bodies corporate by periodical health
check ups.

B. FORMULATION OF MODEL CORPORATE LAW

1. REDEFINITION OF BODY CORPORATE

Bodies Corporate should be redefined to include Statutory bodies, Authorities, Societies, Trusts,
Foundations, Funds and other like bodies with a universal approach for evolving WORLD
CORPORATE ORDER.

2. CONTROL AND REGULATION

Body Corporate should be controlled and regulated by member States keeping in view the following
guidelines:-

a. Determination of Organizational Forms:-For varied nature of activities, and their role in

national economy, it is necessary to determine various forms of organization, so as provide
for specific form of organization for specific nature of activity.
b. Justification for Incorporation:-For incorporation of a body corporate, various factors as
National prioritization and localization of industrial, productive, commercial, professional
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service, utility, education, health care, welfare, charitable, philanthropic, religious and
spiritual activities for corporate sector for natural and balanced development of national
c. Pervasive Control: - State eye should pervade and perceive every activity of corporate
body.
d. Control of Fraudulent persons:- Fraudulent and deceptive persons should be identified,
and prevented from the very stage of incorporation, with a view to ensuring incorporation of
genuine and bonafide corporate bodies for creating pure Corporate Culture conducive to
development of mutual trust and confidence.
e. Distribution of Functions:-There is need for crystallization and break-up of various
administrative, managerial, executive regulatory activities of state functionaries on the basis
of Work Study, Time and Motion study, Organization and Method Study and assignment of
Franchise Rights to professionals, experts and other competent personnel for undertaking
such functions as extended arms of the State, This will lead to opening up of various
functions or jobs to a larger number of persons, which were earmarked exclusively for
certain categories on the basis of restricted eligibility norms.
f. Education Commission and Health Commission: - Education and Health Care Centers in
corporate garb should be controlled and disciplined by establishment of Education
Commission and Health Commission for fulfillment of fundamental rights in reality without
any direct or indirect generation of profit.
g. Corporate Investigation Team: - A Cadre of Corporate Investigators with a panel of
Corporate Professionals of various disciplines and experts in various fields depending upon
the nature of industry or trade for the purposes of effective corporate investigation should be
created.
h. Control of Mock Meetings: - Mock Board meetings and General Body meetings in family
controlled or closely held corporate bodies should be regulated by induction as independent
or professional directors on Board or as Members of Managing or Governing Body, and
submission of report of meetings to the State functionaries.
i. Duties and Responsibilities of Key Personnel: - Duties and Responsibilities of Key
Personnel should be specified for a definite role as to bring about transparency in corporate
functions.
j. Assignment of Professional work by Independent Authorities:-Assignment of
professional work should be assigned by independent authorities or Bodies on equitable
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basis to serve public purposes effectively and thus to prevent marriages of convenience
between corporate bodies and corporate professionals.
k. Identification of Real, Managerial Personnel:-Real Managerial personnel behind show
piece corporate personnel of corporate bodies should be identified for effective assignment
of responsibility and accountability for corporate management in a transparent manner.
l. Regulation of Domestic Directors:-Regulation of internal breed of domestic undirected
Directors and exposure of corporate bodies to sunshine of competent corporate personnel
for transparent corporate management is the need of the times.
m. Control of Corporate Sanatorium:- Corporate bodies should be prevented from turning
into Corporate Sanatorium for inapt, inefficient and idle managerial personnel.

3. CORPORATE MANAGEMENT
a. CORPORATE MANAGEMENT SERVICE

An efficient and effective corporate management service should be established to guide, advise and
manage the Corporate bodies in such a way as to achieve the goal of optimum utilization of resources
and protection of the interests of stakeholders as a part of corporate justice for public welfare.

b. CORPORATE ACCOUNTING SERVICE

Corporate Accounting service with in-built Audit and Cost Analysis should be established and
programmed on computer for prompt efficient and accurate accounting of transactions according to
international standards and their underlying principles to serve a variety of purposes, such as
planning, production, distribution, finance, banking, taxation as well as capital market.

4. CORPORATE REGENERATION

Existing Corporate Bodies should be reviewed by adopting following suggestions:-

a) A review of all corporate bodies should be made periodically to ascertain their utility, or futility
to the national economy. All bodies corporate, whose activities are prejudicial to the national
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economy or public interests should be de-corporatized, wound up, or closed in order to

prevent their further degeneration and purge the Corporate sector of corruption, malpractices,
vices and impurities
b) Such review at periodical intervals should measure corporate performance and ascertain
corporate health by means of X-ray investigation to diagnose symptoms of corporate sickness
to provide appropriate treatment depending upon the condition of Corporate patient and its
future viability.
c) Since Corporate management expenses are usually high on account of various statutory
formalities, it would be economical to amalgamate, merge or combine two or more separate
corporate bodies into one body to reduce avoidable administrative expenses, and to bring
about effective Control and Management.

5. CAPITAL MARKET

a) Gradual elimination of the role of intermediaries from capital market to prevent speculative and
manipulative transactions and establishment of genuine and bonafide operations
b) Identification and preparation of Roll of Honor of all genuine Corporate Investors, Depositors
and Lenders who have served the cause of capital formation in the Corporate sector along
with their contribution.
c) Introduction of one Bank Account Number with supplementary bank accounts, if any, linked to
Investor Identification Number to prevent Securities Market manipulations and other dubious
transactions.

C. PERFECT CORPORATE DEMOCRACY

Model Corporate law should provide for Perfect Corporate Democracy which essentially implies
formulation of perfect laws representing WILL, VOICE and CONSCIENCE of all stakeholders, such as
Shareholders, Debenture holders, Bondholders, Bankers, Depositors, Creditors, Managerial personnel
and employees, Consumers, Government and above all, Public interest as a whole and harmonization
of diverse interests with a view to attaining the goal of Corporate Perfection.
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Corporate democracy as a form of management of corporate bodies springs from the concept of
democracy adopted by the people as a form of government. Corporate Democracy is essentially a part
of the system of democratic form of government, and should partake of the essential characteristics of
democracy and should be bound to dispense corporate justice, as a part of Justice to the people. The
foundation of democracy lies in the will of the majority of the voters, but in corporate democracy, the
will of the voter according to his individual capital contribution, supersedes the will of the majority of
the voters if their capital contribution is lower. But in the case of corporate democracy corporate law
has made mockery of democracy. For example section 87 of The Companies Act, 1956 read as
follows:-

a. “Every member of a company limited by shares and holding any equity share capital therein
shall have a right to vote, in respect of such capital, on every resolution placed before the
company; and

b. His voting rights on a poll shall be in proportion to his share of the paid-up equity capital of
the company.”

Normally an individual has only one vote which is exercisable by him according to his discretion
without any value or weight attached to his vote on the basis of his income tax contribution to the
State, status in society, or the like, but under the system of Corporate Democracy, the value of the
vote of any member or shareholder of the company is not one, but depends on the number of shares
held by him. The value of his votes is thus determined on the basis of mere contribution to the capital
of the company more than his discretion. If we examine the merits and demerits of the proposition, we
would find that the value of the vote depends not on the discretion of the voter, but on his capital
contribution to the company and any number of voters, however large in number but small in
contribution cannot displace any Resolution proposed by a voter with a large contribution. In this way,
the voice of majority, or the combined wisdom of the majority as determined by its numbers cannot
alter the view of minority with a higher value of vote as determined by their contribution to the capital.
Such law ridicules the very concept of democracy, and verges on aristocracy and autocracy.

Democracy is not void of Justice. Democracy does not mean a dead game of numbers. It should be a
live decision vibrant with justice. A decision of the majority would necessarily imply natural decision of
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the living majority and not mere numerical and passive majority. Justice should indwell exercise of
every vote, which should carry rights and liabilities for every proposition in equal measure.

This flaw of corporate law has been the cause of colossal social, economic and political injustice and
the attendant exploitation of the people in various forms and designs, and the abysmal poverty of the
general run of the people.

D. CONCEPT OF CORPORATE JUSTICE

Corporate Justice emanates from the goal of Justice, social, economic, and political which represents
the Will of the people of the country, and a solemn Resolution to secure Justice to its citizens.
Provision of Justice is an obligation of the State, and it is duty bound to advance the cause of Justice, ,
and demonstrate it in all, functions and spheres. The Corporate Sector occupies a pivotal place in the
economy, and, therefore, corporate bodies cannot be allowed to frustrate the goal of Justice, and do
injustice to the people without any control. The State cannot remain idle as a mute spectator of
exploitation which is prejudicial to the realization of the goal of Justice.

Corporate Justice, a pre condition of good corporate governance is a bilateral proposition. Corporate
justice can be explained as social, economic and political justice to be provided to the promoters,
investors, lenders and bankers, consumers, managerial personnel and employees, government and
the public by bodies corporate including Commissions, constitutional or statutory, or corporate
authorities, statutory board, societies, universities, educational institutions, trusts, Foundations &
Funds etc. managed by Board of Directors, Board of Governors, Governing councils, Executive
Committees, or Board of trustees, on the basis of collective wisdom.

I. GUIDING PRINCIPLES FOR CORPORATE JUSTICE

a) Corporate Bodies as Instrumentalities of Corporate Justice

As an artificial person, and a creation of law, all corporate bodies should be obligated by law
to act as instrumentalities or agencies for the purpose of the dispensation of corporate justice
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which will provide social and economic Justice to the people. Assumption of such new role,
and faithful discharge thereof by the corporate sector, will usher in a new era of Justice to the
people, and transform the condition of millions of people as well as of the country. It would be
therefore, be proper for the government to provide by law dispensation of corporate justice as
the goal of all corporate bodies.

b) Ideals and Duties of Corporate Bodies

Every Authority or Commission, Corporations or Company, Society or Trust created by law

has a constitutional obligation and duty to ensure that the business and affairs of such a body
are conducted in a manner which is conducive to the attainment of the ideals of Justice, c
Liberty, Equality and Fraternity.

c) Simplification of Corporate Laws

Corporate laws have many flaws, and have complicated provisions which have created more
problems than they professed to solve. The control and regulation of corporate bodies should
be simplified and made easy for everyone to understand, so that need for specialized
knowledge and consultation is reduced to the barest minimum.

d) Corporate Management and Remuneration

i. Corporate democracy does not essentially imply self-appointment by exercising right of self-
vote, which nullifies the concept of fairness, impartiality, and equality in matters of
employment. Corporate democracy should fairly and justifiably imply appointment of
competent personnel for the management of corporate bodies on the basis of objective
selection at reasonable cost to the corporate body and ultimately render corporate justice to
investors, bankers, government, and the consumers alike.
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ii. Remuneration, salary, perks, privileges, fees, etc. payable by a body corporate to a person
appointed as a Director, part-time or whole- time Manager or employee, by whatever name he
is called, should be commensurate with his real work and worth, and his positive and
constructive contribution to the corporate body, and should match with the availability of
qualified and competent personnel for similar work with due regard to the financial capacity of
the body corporate and its impact upon public justice.

iii. Remuneration for productive and constructive work should be encouraged, and unearned
income should be discouraged. All superfluous and extravagant expenditure in the
maintenance of corporate bodies and corporate economy should be in harmony with the
national economy, which itself should accord with Nature’s economy.

iv. Public policy relating to removal of disparities in income should be given due
consideration which calls for evolution of natural, subsistence levels depending on all
relevant factors with full opportunity for development of inherent potential of human
beings.

e) Corporate Extravagance At Public Cost

i. Corporate monarchs and lords have already played havoc with corporate world, and it is the
stakeholders and the public who have suffered the brunt of corporate extravagance. The
business of luxuries thrives on corporate funds at the cost of corporate economy and corporate
justice to the people. In fact, wide-ranging sickness of the corporate world is normally due to
corporate luxuries of Corporate Monarchs, diversion of funds, and over-invoicing of purchases
and under-hand commissions and discounts in variety of ways.
ii. There is need to examine propriety of Corporate extravaganza at public cost for self-
aggrandizement and regulate Corporate bodies from absorbing personal luxuries into
corporate cushions and holes and maintaining balance between corporate economy and
national economy.
iii. Curbs are also necessary to prevent expenditure on corporate aviation and adoption of
corporate students and trainees.
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f) Standardization of Corporate Products

Corporate products should be standardized and graded to avoid internecine competition, and
avoidable advertisement, and marketing expenses should be reduced to make them available
to the consumers at a cheaper rate and to attain the goal of low cost economy for the common
good of the people.

II. ROLE OF CORPORATE EDUCATION

An integrated course of corporate education with specialized knowledge and training for special
needs of the corporate body should be devised to save the students from pursuing different
courses under different garbs, which are merely academic ornaments for higher monetary gains
without concrete contribution to value of the corporate body. Diversity of such a variety of courses
has baffled the students who often fail to understand the oblique purposes of such courses.
Corporate education should be simplified and all unnecessary courses and subjects not ordinarily
required for use should be omitted. Such an integrated course should cover every aspect of good
corporate management which can dispense corporate justice. Corporate Education should lead
the corporate bodies from the darkness of economic and social exploitation to the light of
corporate justice to be secured to all the human beings. Goals of Corporate education should be;
1. To manage the corporate body in such a way as to make a good corporate citizen.
2. To promote and maintain an equitable balance among the promoters, Investors, Consumers,
Lenders, employees, Government, and the public;
3. To promote and maintain sound corporate health;
4. To remove all vice and bias from the corporate mind to attain corporate purity.
5. To harmonize corporate economy and natural economy, and
6. To realize the goal of perfect corporate management in letter and spirit.

In essence Corporate Education should aim at Corporate Perfection through Corporate

Justice.
E. CORPORATE PERFECTION
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1. Corporate perfection would mean achievement of an ideal balance amongst Promoters and
Investors, Lenders, and Banks, Managerial Personnel and Employees, Government and the
public consumers through corporate purity, corporate integrity, and Corporate Justice. All
corporate bodies authorities, commission and societies, including trusts, being artificial in nature,
are initially pure. It is human mind which corrupts and pollutes the Corporate Body. It is therefore
necessary that decisions and actions of such artificial bodies are attributed to the persons who
actually take the decisions in the name of the body. It would be better if there is adequate record
of those who subscribe to the decisions and those who differ from the same, so that
responsibility, accountability and liability for each decisions and action is ascribed to the
person(s) who participate in, and agree to the decisions, and artificial body is not blamed for
defaults of human beings in charge of its management. Appraisal of Corporate performance
should be based on the norms of Corporate Perfection and extent of Corporate Justice served to
the people.

2. To achieve Corporate perfection through Corporate Justice Universalisation of the

Principles of Justice, should be endeavored by nations which would lead to World Order of
Justice, where universal love binds human beings who attune themselves to principles of
management of life so that Natural justice continues to flow into the lives of people. Unnatural
justice has caused deprivation of an equitable share in the gifts of nature and in a large number
of cases, masses have suffered unfair exploitation due to unnatural enrichment, and unnatural
impoverishment.

F. NATURE AS MODEL OF PERFECTION

Nature alone is the best friend, philosopher, guide and represents as a Model of Perfection in all
creations and their governance through maintenance of balance, and by application of universal laws,
which aim at restoring balance wherever there is imbalance. The entire universe functions under such
immutable Laws of Nature with perfect balance into Unity of Existence, and Justice informs all facets
of life and continues to govern and guide all human activities. The laws of nature are eternal and lead
to natural justice. A study of Nature’s economy will provide real knowledge with perfect balance,
perfect growth and perfect justice.
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Thus Corporate perfection through Corporate Justice should be in line with Nature’s laws, where
Governance of the corporate bodies should be done in a natural manner by adoption of natural
process of development and evolution, aiming at perfection of human life so gracefully offered by
Nature as an opportunity for realizing the goal of life without which the entire exercise of the state and
other forms of Institutions and Organisation is merely an exercise in futility and waste of time and
energy of life wandering in the wilderness.

Divya Agarwal
Research Scholar