Investor Protection in the Aftermath of the Reebok Fraud Case: An Appraisal of the Need for Corporate Governance in Non-Listed Companies
XI Capital Markets Conference (December 21 - 22, 2012)
10 Pages Posted: 10 May 2013
Date Written: December 21, 2012
This paper revolves around the central theme of corporate governance in private sectors in India in light of the recent Reebok Fraud case. It elucidates how such a scam in a private subsidiary of a public company also impacts the shareholders of the public company concerned, apart from the scores of employees, customers and as in the Reebok case - over a hundred franchisees. In light of the case, the paper traces how the need of the hour has called for incorporation of corporate governance in the private sector with scores of public investors’ interest indirectly vested in the private sector market. The paper then touches upon the feasibility of corporate governance in non-listed firms and family businesses in order to install a higher standard of public conscience without compromising the flexibility and independence often sought after and appreciated by these firms. The Code, the authors suggest, could apply to only those unlisted companies above a specified turnover or having a certain minimum number of employees. It could also, apart from stipulating the adoption by the subsidiary the corporate governance standards applicable to the parent company, to the extent that they may apply, codify the best practices as applied in competing jurisdictions. In doing so, perusal of the widely adopted Code Buysee of Belgium could be undertaken.
Keywords: Reebok Case
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