LPK Ltd. alleged that the Good Corporate Governance demands compliances level that match the intentions of legislature, expectations of stakeholders and requirements of regulators. Is the contention of LPK Ltd. correct?

Yes, Good Corporate Governance demands compliance levels that match the intentions of legislature, expectations of stakeholders and requirements of regulators. The compliances, however, are generally found to fall in three categories: Apparent Compliances: Apparent compliance is a disguise form of non-compliance, which is worse than a non-compliance. The classic example for Apparent Compliances are generating documents such as notice, agenda, minutes on papers for board and general meeting which are not actually held. Adequate Compliances: Adequate compliance is compliance in letter. The aspects specified in law are complied in letters, without getting into the spirit of the law, example box ticking practices. Absolute Compliances: Absolute compliances are those which are in line with the spirit and intent of the law. A typical example in this regard is demonstrating shareholder's democracy as prescribed by law. When a company complies with law in its spirit it gains public confidence as well. For example, a company which has set new and effective standards in communicating with shareholders, stock exchanges and General public at large. Its Annual Report is said to be a trend setter and has been commended as an ideal report. It has demonstrated through its practices and procedures its commitment to enhance investor-relations and has amply rewarded its shareholders through its impressive performance and its value based management philosophy helps increase its brand value. It has achieved trust of stakeholders by having a strategic balance between wealth and welfare. Relation between the categories of compliances: The relation between apparent, adequate and absolute compliance can be shown as follows: Absolute Compliance = Adequate Compliance X Apparent Compliance