Question

How does investor indifference contribute to the need for good governance, and what role does e-governance play?

1. The passive involvement of shareholders can lead to directors misusing their power for personal gain, necessitating stronger governance.
2. E-governance provides tools to improve transparency and accountability, thus mitigating the risks associated with weak shareholder associations.
3. Weak shareholder associations are beneficial as they allow directors more flexibility.

• A. 1, 3
• B. 1 മാത്രം
• C. 1
• D. 1, 2

Answer 1

Answer:

D. 1, 2

In many companies, shareholders, particularly institutional investors, are often passive participants, attending meetings infrequently and not engaging actively in the day-to-day management or strategic oversight. This lack of active participation, coupled with weak shareholder associations, can create an environment where company directors may exploit their positions for personal enrichment or make decisions that do not align with the best interests of the company and its broader stakeholder base. Good corporate governance frameworks are designed to address this imbalance by ensuring that directors are held accountable for their actions. E-governance systems are vital in this regard, as they enhance transparency by making information more accessible, improve the efficiency of communication and voting processes, and create robust audit trails, thereby empowering shareholders and deterring misconduct by management.