General counsels’ role in corporate governance
This article is authored by CV Raghu, president and founding member, General Counsel's Association of India (GCAI).
General Counsels (GCs) across corporate India would need to don a strategic business hat in addition to their legal and compliance role for companies to grasp the growth opportunities thrown up by India’s Union Budget 2025.
The Budget proposes to raise the foreign direct investment (FDI) limit for the insurance sector from 74% to 100%. GCs for companies in the banking, financial services, and insurance (BSFI) sector would not only need to understand the implications of the suggested change, but also ensure implementation and enforcement of the objective of this change and ensure compliance with the new regulations and reporting requirements. In addition to the above, they will need to guide strategy in terms of appropriate fund raiser for equity infusion in an unpredictable global market and currency exchange rate conditions.
The proposed introduction of the Jan Vishwas Bill 2.0 which aims to decriminalise over 100 provisions in various laws completely transforms the role of a GC from legal strategic advisory to corporate governance and business strategy. This, in turn, brings in the third imperative with the budget proposing extended time limits for filing updated income tax returns from two to four years. With corporate self-governance becoming the key, the GC’s role as the unsung heroes is to ensure that companies operate with integrity, adhere to the changing rules regulations, and mitigate legal risks. It is not just adhering to the letter of the laws, but also the spirit of the law without dampening the spirit of entrepreneurship in corporate India.
Similarly, the changes in personal income tax slabs will usher in fundamental changes in tax deducted at source (TDS) and tax collected at source (TCS) administration. GCs will play key role in clarifying the Implications for corporate governance and compliance, while ensuring legal and ethical adherence in bringing tax reforms into practice, whether it be revised income tax slabs, exemptions, and/or incentives for corporations.
The Budget has proposed and outlined strategic initiatives in agriculture, manufacturing, and research & development (R&D) to propel the economy on a higher growth trajectory. With the overall mission to reduce dependence on global supply chains and imports and provide incentives and exemptions for key industries, the government announced its Agriculture Mission for aatmanirbharta in pulses: A six-year mission for pulses. Similarly, addressing the issue of low farm productivity in 100 districts, the budget mooted the Prime Minister Dhan-Dhaanya Krishi Yojana.
In proposing the National Manufacturing Mission, to encourage large industries and small and medium enterprises to further the Make in India initiative, and boost domestic manufacturing, exemptions were made on capital goods for electric vehicle and open cells in LED/LCD TVs and lithium-ion batteries production, and raw materials for shipbuilding.
Similarly, the outlay for R&D for small modular reactors within the Nuclear Energy Mission, allocation to support private sector-driven R&D initiatives in research, development, and innovation, comes with specific environmental compliance requirements, and the GCs’ responsibilities in ensuring environmental, social and governance compliances and aligning business strategies with policy cannot be overemphasised.
The Budget’s focus on shipbuilding and large-scale infrastructure projects brings with it legal challenges in infrastructure including navigating environmental laws, land acquisition, as well as managing dispute resolution and public-private partnership (PPP) contracts.
In the new paradigm unfolding post Budget 2025, there is a need for strong legal governance to avoid compliance failures and liabilities, by recognizing GCs as strategic partners rather than mere risk mitigators.
GCs play the role of a bridge between corporate boards and key management personnel (KMPs), safeguarding shareholder value along with operational effectiveness, enhanced productivity, and ethical competitiveness. GCs ensure that the board’s directives align with both, the letter and the spirit of the law, fostering a culture of transparency and corporate responsibility.
GC’s ensure transparency, that companies comply with the law in both letter and spirit, fostering a culture of integrity and ethical business practices. A strong GC function ensures demonstration of courage of conviction, deep understanding of business and law, marrying both of them without undermining the spirit of law and entrepreneurship.
By embedding compliance in corporate strategy, GCs help in preventing legal disputes, ensuring adherence to anti-corruption laws and financial integrity policies, while managing legal aspects of mergers and acquisitions under the new FDI norms, as well as advising on data privacy and intellectual property (IP) protections.
The existing critical gap in India’s regulatory landscape is the limited engagement between lawmakers and law implementers. While external law firms are engaged for drafting regulations, the GCs, who are at the frontline of legal implementation, mostly remain unheard. Policymakers should incorporate their insights to create a legally sound and business-friendly environment.
GCs can play a significant role in achieving the Viksit Bharat vision. For instance, enhanced credit guarantees for MSMEs and various schemes like the PM SVANIDHI with enhanced loans, would have legal and compliance implications. Similarly, with the added focus on healthcare and benefits for gig workers, the need for fresh thinking from the Indian legal context around corporate social responsibility, ESG will also fall on the plate of the GCs.
GCs help in balancing commercial growth with regulatory adherence and in the process, companies get better not just at compliance and reporting requirements but also experience a positive impact on business sustainability and governance culture.
Budget 2025 with its wide-ranging tax reforms and structure impetus has put the power in the hands of the individual and the private corporate sector to craft the next stage of economic growth. The impact on corporate governance, brings with it an urgency to strengthen the GC function for legal resilience and business transparency. In this New India growth story, GCs are no longer simply legal advisors but architects of corporate transparency and financial accountability.
There is a call to action embedded in this and that is for empowering GCs, enhancing policy engagement, and ensuring long-term governance excellence. To be sure, organisations that invest in strong legal governance will be able to chart a stronger path to sustainable, risk-free growth.
This article is authored by CV Raghu, president and founding member, General Counsel's Association of India (GCAI).