Chapter 5

Corporate Governance

Corporate Governance
A System by which corporates are directed & Controlled. Cadbury Committee Corporate Governance as dealing with Procedure, Practices,& Implicit rules that determine a companies ability to take managerial decision Confederation Of Indian Industry (CII)

Importance Of Corporate Governance

To carry out long term relation between company It represent ethical framework, moral framework, Value framework under which business decision are taken. It rationalize the management & monitor organizational performance so that firm may face challenging situation. It improves strategic thinking at top by inducting independent director. It ensure the integrity of financial reports. It helps to providing reasonable good degree of stakeholder confidence in business.

Regulatory & Voluntary action

Cadbury code in United Kingdom was starting point. In India we have kumar Mugalam Birla Code headed by SEBI (Security Exchange Board Of India). Also CII (Confederation Of Indian Industry) Mandatory recommendation:- Absolutely essential for corporate governance. & Non Mandatory recommendation:- May be change as per business demand.

 Applicability:- Private & Public Even applicable for Bank & Financial Institutions Board Of Director:- Executive & Non Executive Director. Non Executive are 30% of Board and one of them is chairman Non Executive are 50% of Board if chairman and Managing Director is same person. Audit Committee:- Shall have access to all financial information. To understand financial reporting process

 Remuneration Committee:- Company must have transparent Policy in determining & accounting for remuneration of the director. Accounting Standard for Financial reporting:- Financial reporting in respect to each product segment must available to shareholder. Management :-