STAKEHOLDERS A person, group or organization that has interest or concern in an

organization

Example for Stake Holder Protection

“Corporate governance is the system by which companies are directed and
controlled.” – The Cadbury Committee (U.K.)
CREDIT RATING AGENCIES

 Credit rating is simply an opinion on the credit quality of a firm i.e. the ability of debt
issuing firm to service the instrument.
 Credit rating originated in the U.S.A. in 1909 when Moody’s began rating corporate
and railroad bonds.
 In India the practice of credit rating began in 1988 with the setting up of the Credit
Rating and Investor Services of India Ltd (CRISIL).
1. CRISIL Credit Rating Information Services of India Limited
2. CARE- Credit Analysis and Research limited
3. ICRA Investment Information and Credit Rating Agency
4. Small and Medium Enterprises Rating Agency of India
5. ONICRA Credit Rating Agency is the private rating agency established by Sonu
Mirchandani under ONIDA Finance.
6. FITCH India India Ratings and Research (Ind-Ra)
Key functions of Credit Rating Agencies

1. Low cost information : The credit rating agency collects, analyses, interprets and makes a
proper conclusion of any complex data and transforms into very lucid and easily
understandable manner.

2. Provides a basis for suitable risk and return: The instruments rated by rating agency gets
greater confidence amongst investor community. It also gives an idea regarding the risk
associated with the instrument.

3. Helps in formulation of Public policy: If debt instruments are professionally rated, it

becomes very easy to judge the eligibility of various securities for inclusion in the institutional
portfolio with greater confidence.

4. Provides superior information: Credit rating agency being an independent rating agency,
due to highly trained and professional staffs and with the access to information which are not
publicly available information, these agencies are able to deliver superior information.

5. Enhances corporate image: Better credit rating to any credit investment enhances visibility
and corporate image in the industry.

Corporate credit ratings

S&P, Moody’s, Fitch and DBRS are the only four ratings agencies that are recognized by
the European Central Bank (ECB) for determining collateral requirements for banks to borrow
from central bank. These rating agencies assign rating to the company and to its financial
instruments like bonds.
 CSR AND CORPORATE GOVERNANCE
While enhancing shareholder value is still a major goal for all company, the concepts of
corporate governance (CG) and corporate social responsibility (CSR) enter the picture to reach
to the goal.
Corporate Governance Corporate Social Responsibility (CSR)
Corporate Governance is ensuring that an Corporate Social Responsibility (CSR) is corporate
organization is run in a responsible manner by form of self-regulation integrated into the business
ensuring accountability, transparency and model to create a positive impact on the
compliance with due regard to its key stakeholders. stakeholders and the environment.

It is the whole set of legal, cultural, and institutional CSR is a concept whereby companies integrate
arrangements that determine what publicly traded social and environmental concerns in their business
corporations can do, who controls them, how that operations and in their interactions with their
control is exercised, and how the risks and returns stakeholders on a voluntary basis (European
from the activities they undertake are allocated Commission, 2001).
(Margaret Blair, 1995)
Corporate Governance was related to profit CSR apparently was against profit maximization
maximization and provided protection to because it suggested a set of actions beneficial for
shareholders who have provided capital to firm external stakeholders that may not be good for a
shareholder
Corporate Governance is an umbrella term CSR is gradually getting fused into the company’s
corporate governance practices.
There is something called triple bottom line It means company should focus on 3 things :
(1) Economic responsibilities (profit)
(2) Social responsibilities (people) and
(3) Environmental responsibilities (planet) and company shows commitment towards society’s
sustainability.