Whether corporate goverance is applicable to private limited companies?

Question

Whether corporate goverance is applicable to private limited companies?

Answer 1

CORPORATE GOVERANCE IS NOT APPLICABLE TO PRIVATE LIMITED COMPANIES. IT IS ONLY APPLICABLE TO LISTED COMPANIES.

Answer 2

private limited companies are also corporate bodies under company law. they have to observe the requirements of company law but there are lesser formalities.

Answer 3

Lets try to understand what is corporate governance all about and then you will get the answer for your question.

Corporate governance is a fair, transparent and accountable way of governing a corporate / company to instill confidence in the motives and the capabilities of a company in its stake holders. Stake holders are generally the govt, the company management, employess, vendors/suppliers and the customers of the company. So corporate governance is for the benefit of stakeholders. Rather than viewing it as a regulatory requirement, we need to look at the essence of having such a requirement. A business is positively impacted if its stakeholders know what are the guiding pricniples of commpany, what are its future plans etc.. And every company, irrespective of the fact whether it is private or public limited company has stakeholders and as a company it has to strive for the benefit of the stakeholder. Hence, corporate governance is a virtue to be present in every company.