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    Corporate Governance: Shubhamveer Singh (mb15) Saurabh Pratap Rao (mb43) Jai Prakash Kushwaha (mb57) Ankur Jaiswal (mb70)

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    Usha Sree Bodakunti
    This document provides an overview of corporate governance. It defines corporate governance as the application of best management practices and compliance with laws to effectively manage a company and create wealth for stakeholders. It discusses principles like sustainable development, effective management, social responsibility, and adherence to ethical standards. Key aspects of corporate governance covered include accountability, fairness, transparency, independence, control environment, disclosure, shareholder rights, and board commitment. The document also discusses the evolution of corporate governance regulations in India.

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    Corporate Governance: Shubhamveer Singh (mb15) Saurabh Pratap Rao (mb43) Jai Prakash Kushwaha (mb57) Ankur Jaiswal (mb70)

    Uploaded by

    Usha Sree Bodakunti
    21 views33 pages
    This document provides an overview of corporate governance. It defines corporate governance as the application of best management practices and compliance with laws to effectively manage a company and create wealth for stakeholders. It discusses principles like sustainable development, effective management, social responsibility, and adherence to ethical standards. Key aspects of corporate governance covered include accountability, fairness, transparency, independence, control environment, disclosure, shareholder rights, and board commitment. The document also discusses the evolution of corporate governance regulations in India.

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    This document provides an overview of corporate governance. It defines corporate governance as the application of best management practices and compliance with laws to effectively manage a company and create wealth for stakeholders. It discusses principles like sustainable development, effective management, social responsibility, and adherence to ethical standards. Key aspects of corporate governance covered include accountability, fairness, transparency, independence, control environment, disclosure, shareholder rights, and board commitment. The document also discusses the evolution of corporate governance regulations in India.

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    Download as pdf or txt
    21 views33 pages

    Corporate Governance: Shubhamveer Singh (mb15) Saurabh Pratap Rao (mb43) Jai Prakash Kushwaha (mb57) Ankur Jaiswal (mb70)

    Uploaded by

    Usha Sree Bodakunti
    This document provides an overview of corporate governance. It defines corporate governance as the application of best management practices and compliance with laws to effectively manage a company and create wealth for stakeholders. It discusses principles like sustainable development, effective management, social responsibility, and adherence to ethical standards. Key aspects of corporate governance covered include accountability, fairness, transparency, independence, control environment, disclosure, shareholder rights, and board commitment. The document also discusses the evolution of corporate governance regulations in India.

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    of 33

    CORPORATE

    GOVERNANCE

    Presented By:-
    Shubhamveer Singh (mb15)
    Saurabh Pratap Rao (mb43)
    Jai Prakash Kushwaha(mb57)
    Ankur Jaiswal (mb70)
    Corporate Governance
     Corporate Governance is the application of
    best management practices, compliance of
    law in true letter and spirit and adherence to
    ethical standards for effective management
    and distribution of wealth and discharge of
    social responsibility for sustainable
    development of all stakeholders.
     Conduct of business in accordance with
    shareholders desires (maximising wealth)
    while confirming to the basic rules of the
    society embodied in the Law and Local
    Customs
    Corporate Governance
     Relationships among various participants in
    determining the direction and performance of
    a corporation.
     Effective management of relationships among
    – Shareholders
    – Managers
    – Board of directors
    – employees
    – Customers
    – Creditors
    – Suppliers
    – community
    Why Corporate Governance?
     Better access to external finance
     Lower costs of capital – interest rates on
    loans
     Improved company performance –
    sustainability
     Higher firm valuation and share performance
     Reduced risk of corporate crisis and scandals
    Principles of Corporate Governance
     Sustainable development of all stake
    holders- to ensure growth of all individuals
    associated with or effected by the enterprise
    on sustainable basis
     Effective management and distribution of
    wealth – to ensue that enterprise creates
    maximum wealth and judiciously uses the
    wealth so created for providing maximum
    benefits to all stake holders and enhancing its
    wealth creation capabilities to maintain
    sustainability
     Discharge of social responsibility- to ensure that
    enterprise is acceptable to the society in which it is
    functioning
     Application of best management practices- to
    ensure excellence in functioning of enterprise and
    optimum creation of wealth on sustainable basis
     Compliance of law in letter & spirit- to ensure value
    enhancement for all stakeholders guaranteed by the
    law for maintaining socio-economic balance
     Adherence to ethical standards- to ensure
    integrity, transparency, independence and
    accountability in dealings with all stakeholders
    Four Pillars of Corporate Governance
     Accountability
     Fairness
     Transparency
     Independence
    Accountability
     Ensure that management is accountable to the
    Board

     Ensure that the Board is accountable to


    shareholders
    Fairness
     Protect Shareholders rights

     Treat all shareholders including


    minorities, equitably

     Provide effective redress for violations


    Transparency

    Ensure timely, accurate disclosure on all


    material matters, including the financial
    situation, performance, ownership and
    corporate governance
    Independence
     Procedures and structures are in place so as
    to minimise, or avoid completely conflicts of
    interest

     Independent Directors and Advisers i.e. free


    from the influence of others
    Elements of Corporate Governance
     Good Board practices

     Control Environment

     Transparent disclosure

     Well-defined shareholder rights

     Board commitment
    Good Board Practices
     Clearly defined roles and authorities

     Duties and responsibilities of Directors


    understood

     Board is well structured

     Appropriate composition and mix of skills


    Good Board procedures
     Appropriate Board procedures

     Director Remuneration in line with best


    practice

     Board self-evaluation and training conducted


    Control Environment
     Internal control procedures

     Risk management framework present

     Disaster recovery systems in place

     Media management techniques in use


    Control Environment
     Business continuity procedures in place

     Independent external auditor conducts audits

     Independent audit committee established


    Control Environment
     Internal Audit Function

     Management Information systems established

     Compliance Function established


    Transparent Disclosure
     Financial Information disclosed

     Non-Financial Information disclosed

     Financials prepared according to International


    Financial Reporting Standards (IFRS)
    Transparent Disclosure
     Companies Registry filings up to date

     High-Quality annual report published

     Web-based disclosure
    Well-Defined Shareholder Rights
     Minority shareholder rights formalised

     Well-organised shareholder meetings


    conducted

     Policy on related party transactions


    Well-Defined Shareholder Rights
     Policy on extraordinary transactions

     Clearly defined and explicit dividend policy


    Board Commitment
     The Board discusses corporate governance
    issues and has created a corporate
    governance committee
     The company has a corporate governance
    champion
     A corporate governance improvement plan
    has been created
     Appropriate resources are committed to
    corporate governance initiatives
    Board Commitment
     Policies and procedures have been formalised
    and distributed to relevant staff
     A corporate governance code has been
    developed
     A code of ethics has been developed
     The company is recognised as a corporate
    governance leader
    Other Entities
     Corporate Governance applies to all types of
    organisations not just companies in the
    private sector but also in the not for profit and
    public sectors

     Examples are
    NGOs, schools, hospitals, pension
    funds, state-owned enterprises
    Corporate governance in India
     The Indian corporate scenario was more or less
    stagnant till the early 90s.

     The position and goals of the Indian corporate


    sector has changed a lot after the liberalisation
    of 90s.

     India’s economic reform programme made a


    steady progress in 1994.

     India with its 20 million shareholders, is one of


    the largest emerging markets in terms of the
    market capitalization.
    Corporate governance of India has undergone a
    paradigm shift

     In 1996, Confederation of Indian Industry


    (CII), took a special initiative on Corporate
    Governance.

     The objective was to develop and promote a


    code for corporate governance to be adopted
    and followed by Indian companies, be these in
    the Private Sector, the Public Sector, Banks or
    Financial Institutions, all of which are corporate
    entities.

     This initiative by CII flowed from public concerns


    regarding the protection of investor
    interest, especially the small investor, the
    promotion of transparency within business and
    industry
    Securities and Exchange Board of India
     The Government of India's securities watchdog, the
    Securities Board of India, announced strict corporate
    governance norms for publicly listed companies in
    India.

     The Indian Economy was liberalised in 1991. In


    order to achieve the full potential of liberalisation and
    enable the Indian Stock Market to attract huge
    investments from foreign institutional investors (FIIs),
    it was necessary to introduce a series of stock
    market reforms.

     SEBI, established in 1988 and became a fully


    autonomous body by the year 1992 with defined
    SEBI
     On April 12, 1988, the Securities and Exchange
    Board of India (SEBI)was established with a dual
    objective of protecting the rights of small investors
    and regulating and developing the stock markets in
    India.
     In 1992, the ‘BSE’ ,the leading stock exchange in
    India, witnessed the first major scam masterminded
    by Harshad Mehta.
     Analysts felt that if more powers had been given to
    SEBI,the scam would not have happened.
     •As a result the ‘GoI’ brought in a separate legislation
    by the name of ‘SEBI Act 1992’and conferred
    statutory powers to it.
     Since then, SEBI had introduced several stock
    SEBI and Clause 49
     SEBI asked Indian firms above a certain size
    to implement Clause 49, a regulation that
    strengthens the role of independent directors
    serving on corporate boards.

     On August 26, 2003, SEBI announced an


    amended Clause 49 of the listing agreement
    which every public company listed on an
    Indian stock exchange is required to sign.
    The amended clauses come into immediate
    effect for companies seeking a new listing.
    The major changes to Clause 49…
     Independent Directors:- 1/3 to ½depending
    whether the chairman of the board is a non-
    executive or executive position.

     Non-Executive Directors:- The total term of office


    of non-executive directors is now limited to three
    terms of three years each.

     Board of Directors:- The board is required to


    frame a code of conduct for all board members
    and senior management and each of them have
    to annually affirm compliance with the code.
     Audit Committee:- Financial statements and the draft
    audit report of management discussion and analysis of…
    • Financial condition
    • Result of operations of compliance with laws
    • Risk management letters
    • Letters of weaknesses in internal controls issued by
    statutory
    • Internal auditors
    • Removal and terms of remuneration of the chief
    internal auditor

     Whistleblower Policy :- This policy has to be


    communicated to all employees and whistleblowers
    should be protected from unfair treatment and
    termination.

     Subsidiary Companies:- 50% non-executive directors &


    1/3 & ½independent directors depending on whether the
    chairman is non-executive or executive.
    Conclusion
     As Indian companies compete globally for access
    to capital markets, many are finding that the
    ability to benchmark against world-class
    organizations is essential.

     For a long time, India was a managed, protected


    economy with the corporate sector operating in
    an insular fashion.

     But as restrictions have eased, Indian


    corporations are emerging on the world stage and
    discovering that the old ways of doing business
    are no longer sufficient in such a fast-paced
    global environment.
    Thank You

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