Corporate Governance Norms for SME

Dr. Indrajit DubeDean, RG School of IP Law

Indian Institute of Technology Kharagpur

About My Law School at IIT

• IThas beenestablished four years back with the generous donation of Mr. Vinod Gupta, a illustrious alumni and business magnet of USA.

• The objective of the school is to promote legal education interfacing with Technology and Management.

• At present the school runs an executive program called LL.B [Specialization in IPR] and a research program [Ph.D].

• The School also carries multi – disciplinary action research.

About the theme

• Times editor commented in an interview with NDTV that India is not affected to that extent in the global recession because of its micro-economic structure and SME.

• According to me, SME will be driving factorofour economy in coming days.

• To achieve that end, SME should be transformed from ‘informal organizational form ’ to ‘formal organizational form’.

Issues SME faces

• Inadequate public support and infrastructure facility

• Deficiency in organizational planning and modeling

• Organizational succession plan• Ignorance and inability of risk management

The Present Research was Funded by National Foundation for

Corporate Governance [NFCG]

About Research• Time frame : About twenty months• Universe :

» Geographically entire India» Strata broadly divided in Production and Service

Enterprises

• Sample Method: Random • Sample Size: Two thousand two hundred and

eleven• Research Tools:

» Schedules administered in person» Schedule administer through web» Interview

Findings of Primary Survey

Findings of Primary Survey

Findings of Primary Survey

Findings of Primary Survey

Why and What

• SME to be a partner to the inclusive growth• Better organizational structure, better credit

worthiness, better employer, better contributor in economic growth

• Draw a succession plan for sustainable growth

Corporate Governance based on stakeholder approach not on agency problem

Recommended Corporate Governance Norms for SME’s

• Prepare and Publish ‘Mission Statement’ of Enterprises• Enterprise Policy Statement to Manage Business Growth • Enterprise Succession Plan • Annual Management and Accomplishment Statements• Management Structure and Level of Professional Qualification

as relevant to Industry• Method of accounting and disclosure of audited account• Stakeholder relations and welfare undertaken by the

enterprise• Legal and regulatory Compliances

Thank you