Governance risk

Governance is the system of checks that prevent a company's controlling shareholders (typically the promoter family in India) from taking value at the expense of minority shareholders.

When governance is strong, board independence is real, audit committees are active, related-party transactions are at market terms, and disclosures are honest. When governance is weak, none of those checks works - and minority shareholders silently bleed.

The five biggest governance risks

1. Compromised board. "Independent directors" who are friends, ex-employees, or relatives of the promoter. Quorum without real questions. Board meeting attendance below 75%.

2. Captive auditor. The auditor has been with the company for decades, audits multiple group entities, or has limited independence. Look at auditor change history and any qualifications.

3. Related-party transactions at non-market terms. Already covered in detail on the related-party page - usually the largest silent value transfer.

Governance risk

Governance is the system of checks that prevent a company's controlling shareholders (typically the promoter family in India) from taking value at the expense of minority shareholders.

The five biggest governance risks

1. Compromised board. "Independent directors" who are friends, ex-employees, or relatives of the promoter. Quorum without real questions. Board meeting attendance below 75%.

2. Captive auditor. The auditor has been with the company for decades, audits multiple group entities, or has limited independence. Look at auditor change history and any qualifications.

3. Related-party transactions at non-market terms. Already covered in detail on the related-party page - usually the largest silent value transfer.