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21 Nat'l L. Sch. India Rev. 1 (2009)

handle is hein.journals/nlsind21 and id is 1 raw text is: ARTICLES A CAUTIONARY TALE OF THE TRANSPLANT EFFECT ON INDIAN CORPORATE GOVERNANCE Umakanth Varottil During the last decade, there has been a sustained effort on the part of Indian regulators to strengthen corporate governance norms. This has been strongly influenced by developments that occurred in other parts of the world, particularly the Sarbanes-Oxley Act in the U.S. and the Cadbury Committee Report in the U.K. This study reflects upon whether the policies adopted by the Indian regulators are adequate or whether they require some mid-course correction. With that in mind, this Article adopts a revisionist approach with the help of two simple assertions, develops thosefurther and leaves some food for thought leading to possible further detailed normative research. The twin assertions are: (i) the broad features of the Indian corporate governance norms have been transplanted from other jurisdictions such as the U.S. and U.K. that follow the outsider model ofcorporate governance, and hence those norms are not likely to be suitable for implementation in addressing governance problems in India, which follows the insider model; and (ii) recent events involving the collapse of several leadingfinancial institutions provide evidence, at least anecdotal in nature, that the corporate governance norms followed in the U.S. and U.K. have not been effective in preventing large-scale corporate governance failures, thereby raising questions about the efficacy of that model in the Indian context. Through these assertions, this Article makes the case that the source for strengthening Indian corporate governance lies within. Seeking out othersystems B.A., LL.B (Hons.), National Law School of India University, Bangalore, LL.M (Corporations), New York University School of Law; PhD Candidate, Faculty of Law, National University of Singapore. I thank Shaun Mathew, Nuggehalli Nigam, Jayant Thakur and Hans Tjio for their thoughtful comments on an earlier draft of this Article. I am also grateful to the panelists (Roel Campos, John C. Coffee, Vikramaditya S. Khanna and Michael Useem) as well as participants at the panel discussion entitled Beyond Satyam: Analyzing India's Corporate Governance organized by the Jindal Global Law School in New York on February 4, 2009, whose insights have been invaluable in refining several positions adopted in this Article. Needless to say, any errors or omissions remain mine alone.

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