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Salina - ADB Principles of Corporate Governance and Their Impact on Nepalese Corporate Sector

Salina - ADB Principles of Corporate Governance and Their Impact on Nepalese Corporate Sector

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Published by Sarena Nakarmi

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Published by: Sarena Nakarmi on Jun 13, 2012
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06/13/2012

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1
ADB Principles of Corporate Governanceand their impact on Nepalese Corporate sector
Submitted to:
Resham Raj Regmi(Corporate Governance Instructor)
Submitted by:
Salina NakarmiMBA term VI
 
2
Table of Contents
 
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Corporate Governance
Corporate governance, broadly defined, consists of the institutional structures, legal rules, andbest practices that determine which body within the corporation is empowered to make particulardecisions, how the members of that body are chosen, and the norms that should guide decisionmaking. Specifically, corporate governance may be understood as the rules by which theseparation of ownership and control becomes a defining characteristic of the public corporation.
Although shareholders nominally ―own‖ the corporation, they have virtually no decision
-making
 powers. They are entitled only to elect the firm’s directors and to vote on an exceedingly
limited
 — 
albeit not unimportant
 — 
number of corporate actions. Rather, management of the firmis vested in the hands of the board of directors, who in turn delegate the day-to-day running of 
the firm to its officers, who in turn delegate some responsibilities to the company’s
employees.
The term ―corporate governance‖ has been used broadly to refer to the direction and control of 
companies from the viewpoint of the responsibilities of the board of directors. Corporategovernance can also be described as the way a company manages itself in order to ensure fairand equitable returns to all shareholders and other financial stakeholders. It may also refer to the
rules and incentives by which shareholders control and influence a company’s management so as
to maximize profits and the value of the corporation.The Business Sector Advisory Group on Corporate Governance to the Organization forEconomic Cooperation and Development (OECD) has articulated a set of core principles of corporate governance practices2 that are relevant across a range of jurisdictions. These are:
 
Fairness, referring to the equitable treatment of all shareholders;
 
Transparency, i.e., the process of disclosing information on a company’s performance
over a certain period of time;
 
Accountability based on a system of checks and balances and sound auditing practices;and
 
Responsibility for decisions and actions through clearly defined roles and duties forowners, shareholders, directors and managers.The OECD Principles of Corporate Governance states:

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