Sarbanes Oxley & Corporate Governance
We all know by now, what forced major legislators worldwide to enforce Sarbanes Oxley Act 2002 and the likes of it the world over. WorldCom, Enron…the names flow. What is Sarbanes Oxley (SOX) and how is it related to corporate governance? Well! SOX is “An act to protect investors by improving accuracy and reliability of corporate disclosures made pursuant to the US Securities laws” and the birth of SOX is the effect of clandestine mis-governance of corporations by the agents (as in Agency Theory). Simply put, Corporate Governance is a mechanism of having an oversight over the functioning of the Management and to maintain transparency and disclosure norms when communicating with the stakeholders (investors, employees, society etc.). The Structure of the board is designed to constitute Independent Non-Executive Directors who member and chair various committees like the Audit Committee, the Finance Committee, the Nominating Committee etc. to which, respective functional heads directly re