Professional Documents
Culture Documents
Regulatory Compliance & Corporate Governance
Regulatory Compliance & Corporate Governance
ACKNOWLEDGEMENTS
The Group would like to convey their sincere thanks to Professor for his unstinted
support & guidance without which it would not have been possible for us to carry out
the study.
His valuable inputs on the subject Legal Aspects of Management and deliberations
in the class were knowledge enriching & facilitated in completing the project.
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Contents
Introduction .................................................................................................. 4
What is Corporate Governance? ................................................................. 4
Structure of Corporate Governance ........................................................... 6
The Evolution of Corporate Governance.................................................... 9
International Corporate Governance ........................................................ 14
Corporate Governance in India ................................................................. 18
Systemic Problem of Corporate Governance .......................................... 19
Corporate Governance: Regulatory Compliance ................................... 21
Best Corporate Experiences in Corporate Governance.......................... 24
Nokia...................................................................................................... 24
Dabur ..................................................................................................... 24
ONGC..................................................................................................... 25
Royal Philips Electronics..................................................................... 26
Tata Sons .............................................................................................. 27
Toyota.................................................................................................... 29
Conclusion .................................................................................................. 31
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Introduction
A countrys growth and progress; its sustainability and consistency solely depend on
the systematic approach and practice of good governance. Good Governance can
help to create a healthy and effective development of the economy, which in turn will
provide equity and benefits to its shareholders. Corporate Governance has evolved
and grown significantly as a burning issue in the last decade. Numerous countries
have issued codes of Corporate Governance and the recommendations of these
codes symbolize Good Governance in the Corporations undoubted contribute
towards increased transparency, morality, ethics and disclosure.
<Swami (Dr.) Parthasarathy, Corporate Governance Principles, Mechanisms &
Practice, Page 3-4, Year- 2010, Publisher- Biztantra, New Delhi>
Corporate governance is all about the policies, procedures and rules governing the
relationships between the shareholders, stakeholders, Directors and Managers in a
company, as defined by the applicable laws, the Corporate charter, the Companys
bylaws, and formal policies. Primarily it is about managing top management, building in
checks and balances to ensure that the senior executives pursue strategies that are in
accordance with the corporate mission. It consists of a set of processes, customs,
policies, laws and institutions affecting the way of a corporation is directed, administered
or controlled. Corporate governance governs the relationship among the many players
involved (the stakeholders) and the goals for which the corporation is governed.
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Protecting the long term interest and enhancing the values of shareholders and
other stakeholders (viz. customers, employees, creditors, bankers, regulators
and society at large)
<http://cab.org.in/Lists/Knowledge%20Bank/Attachments/114/Corporate%20Governance.
ppt, 12.12.2011, 8:00 PM>
Governance
Governance is not merely about ownership and control. Even an owner has to learn to
govern.
Good Governance
Good governance is about simplicity in processes combined with checks and balances,
clarity of roles, assignment of responsibilities and obligation, all of which would lead to
enhanced accountability, wherever it is due.
Corporate Governance
Corporate Governance encompasses commitment to values and to ethical business
conduct to maximise shareholder values on a sustainable basis, while ensuring fairness
to all stakeholders. Corporate Governance is a way of life and not a set of rules. It is a
way of life that necessitates taking into account the shareholders interest in every
business decision.
<www.mcx-sx.com/downloads/Corporate_Governance.pdf, 18.11.2011, 9:21 PM>
Particularly the areas of transparency and disclosure have been a major factor
behind instability in the financial markets across the globe
Essential pre-requisite for the integrity and credibility of capital market players
Structure
of
Corporate
Board of
Directors
Governance
The
Corporate
Managers
Governance
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Managers
&
Shareholders
The system spells out the rules & procedures for making decisions on Corporate Affairs,
provides the structure through which the company objectives are set, as well as the
means of attaining and monitoring the performance of those objectives. Corporate
Governance helps in ensuring conditions whereby the Organisations Directors and
Managers act in the larger interests of the Organisation and its shareholders and to
ensure the means by which managers are held accountable to capital providers for use
of assets.
<Swami (Dr.) Parthasarathy, Corporate Governance Principles, Mechanisms &
Practice,Year- 2010, Publisher- Biztantra, New Delhi>
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<http://www.iirmworld.org.in/ppt/yrkreddy.pps#383,4,Slide
<Corporate
Governance
Corporate Governance can also be explained on the basis of 4Ps (People, Processes &
Performance). Business cannot run with only profits, but there must be recognition for
human aspects too. This is possible by Corporate Governance. Corporate Governance
has the integrated framework, where the people are formally either trained or helped to
develop to work for a definite and defined purpose in applying the systematic processes
consistently to give constant growth by better performance.
<Swami (Dr.) Parthasarathy, Corporate Governance Principles, Mechanisms &
Practice, Page 27-32, Year- 2010, Publisher- Biztantra, New Delhi>
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Since the mid-1990s, several corporate governance guidelines and regulations have
been prepared in different parts of the world. Some of the guidelines are:
Recommended that:
(i)
(ii) The directors service contracts should not exceed three years without approval
by the shareholders.
(iii) Each listed company should establish an audit committee of at least three nonexecutive directors.
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Aimed to provide an answer to the general concerns about the accountability and
level of directors.
Argued against statutory control and for strengthening accountability by the proper
allocation of responsibility for determining directors remuneration, the proper
reporting to shareholders, and greater transparency in the process.
Produced the Greenbury Code of best practice which was divided into four
sections thus:
i. Remuneration Committee
ii. Disclosure
iii. Remuneration Policy
iv. Service contracts and compensation.
Recommended that:
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Recommended that where companies do not have an internal audit function, the
board should consider the need for carrying out an internal audit annually.
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