Corporate Fraud in Legal Framework

Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community. A proper corporate governance is very much relevant for a proper functioning of an enterprise. This article emphasises the basic principles of corporate governance and the transparency that it requires for the expansion and success of firms. But the fraud which occurs in the corporate governance poses a huge constraint to the firms. This is popularly referred to as corporate fraud. When illegal activities are done by the people it creates or poses a huge impending effects upon the firms therefore, the article has highlighted the importance or relevance of preventing corporate fraud. The common effects that corporate fraud generally creates are financial instability of the firms which would eventually lead to the bankruptcy of the firms. Therefore it is high time to completely curb off this issue from the society as the stake or interests of the firms are in trouble. This question of fact and related legal aspects of the same with the help of some case studies have been discussed in this article. Eventually, the relevance of swiping off the hindrances caused by corporate fraud is to be discussed to a great extent and a major chunk of the same has been discussed in this article.