CORPORATE GOVERNANCE Corporate Governance Corporate governance is about

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CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Corporate Governance "Corporate governance is about maintaining an appropriate balance of accountability between three

Corporate Governance "Corporate governance is about maintaining an appropriate balance of accountability between three key players : the corporation's owners, the directors whom the owners elect, and the managers whom the directors select. Accountability requires not only good transparency, but also an effective means to take action for poor performance or bad decisions. "

Corporate Governance Corporate governance is about commitment to values and ethical business conduct. It

Corporate Governance Corporate governance is about commitment to values and ethical business conduct. It is about how an organization is managed. This includes its corporate and other structures, its culture, policies and the manner in which it deals with various stakeholders.

Corporate Governance Accordingly, timely and accurate disclosure of information regarding the financial situation, performance,

Corporate Governance Accordingly, timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the company is an important part of corporate governance. This improves public understanding of the structure, activities and policies of the organization. Consequently, the organization is able to attract investors, and enhance the trust and confidence of the stakeholders

Corporate Governance – Set of mechanisms used to manage the relationships (and conflicting interests)

Corporate Governance – Set of mechanisms used to manage the relationships (and conflicting interests) among stakeholders, and to determine and control the strategic direction and performance of organizations (aligning strategic decisions with company values) Effective CG interest nations to reflects itas societal standards

Corporate Governance “ An internal system encompassing policies, processes and people, which serves the

Corporate Governance “ An internal system encompassing policies, processes and people, which serves the needs of shareholders and other stakeholders, by directing and controlling management activities with good business objectivity, accountability and integrity. It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.

Corporate Governance The perceived quality of a company's corporate governance can influence its share

Corporate Governance The perceived quality of a company's corporate governance can influence its share price as well as the cost of raising capital. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes.

Corporate Governance in India In India, the Confederation of Indian Industry (CII) took the

Corporate Governance in India In India, the Confederation of Indian Industry (CII) took the lead in framing a desirable code of corporate governance in April 1998. This was followed by the recommendations of the Kumar Mangalam Birla Committee on Corporate Governance. This committee was appointed by the Securities and Exchange Board of India (SEBI). The recommendations were accepted by SEBI in December 1999, and are now incorporated in Clause 49 of the Listing Agreement.

Corporate Governance in India SEBI also instituted a committee under the chairmanship of N.

Corporate Governance in India SEBI also instituted a committee under the chairmanship of N. R. Narayana Murthy which recommended enhancements in corporate governance. SEBI has incorporated the recommendations made by the Narayana Murthy Committee on Corporate Governance in clause 49 of the Listing Agreement. The revised clause 49 was made effective from January 1, 2006.

Principles of corporate governance Rights and equitable treatment of shareholders: Organizations should respect the

Principles of corporate governance Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings.

Principles of corporate governance Interests of other stakeholders: Organizations should recognize that they have

Principles of corporate governance Interests of other stakeholders: Organizations should recognize that they have legal and other obligations to all legitimate stakeholders.

Principles of corporate governance Role and responsibilities of the board: The board needs a

Principles of corporate governance Role and responsibilities of the board: The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties.

Principles of corporate governance Integrity and ethical behavior: Ethical and responsible decision making is

Principles of corporate governance Integrity and ethical behavior: Ethical and responsible decision making is not only important for public relations, but it is also a necessary element in risk management and avoiding lawsuits. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.

Principles of corporate governance Disclosure and transparency: Organizations should clarify and make publicly known

Principles of corporate governance Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

corporate governance controls INTERNAL • Monitoring by the board of directors • Internal control

corporate governance controls INTERNAL • Monitoring by the board of directors • Internal control procedures and internal auditors • Balance of power

corporate governance controls EXTERNAL • competition • demand for and assessment of performance information

corporate governance controls EXTERNAL • competition • demand for and assessment of performance information (especially financial statements) • government regulations • labour market • media pressure