With the rise of demands on openness, transparency, regular auditing and participation of all stakeholders on important decisions, SEBI has constituted a committee under chairmanship of Narayan Murthy in 2002 to evaluate and improve the situation of Corporate Governance in India. In India, all initiatives toward the Corporate Governances are taken by Ministry of Corporate Affairs and SEBI.

Narayan Murthy Committee report recommends following mandatory points on which MCA and SEBI are looking to implement in phased manner:

(1.) Making Auditing a regular task and strengthening the Auditing committee by providing them autonomy.

(2). Approval of stock holders and board of director for payments and compensation and payment paid to non-executive directors.

(3.) To bring in code of conducts and rules to be followed.

(4.) Requiring corporate executive boards to make stakeholders and share holders aware of any risks company may face in future in every annual reports.

(5.)improving the quality of financial disclosures, including those related to related partytransactions and proceeds from initial public offerings

;Hence through the mentioned it is clear that recommendation is toward disciplining corporate governance and making it more transparent and stakeholder’s friendly.

The committee made the following recommendations:

• Audit committees to be strengthened and their responsibilities upgraded by giving them power to review financial statements, management discussions, compliance with laws and risk management reports of corporations.

• Financial disclosures, on quarterly basis, be made enriched with the information of money raised through IPOs and about related party transactions. This will ensure prevention of