Professional Documents
Culture Documents
Concept
It involves a set of relationships between a company’s management, its
board, its shareholders and other stakeholders.
An important theme of corporate governance is the nature and
extent of accountability of people in the business, and mechanisms that try to
decrease the principal–agent problem.
Objective
A properly structured board capable of taking independent and
objective decisions is in place at the helm of affairs.
Consequently, it has become a part of the government’s duty to
ensure accountability and responsibility in corporate behavior.
Effective disposal of this responsibility basically revolves around two
things:
Requiring experience and technical skill and can be very costly. Thus,
there is no doubt.
That fraud is best prevented, rather than dealt with after the fact. The
most effective and appropriate response to the problem of fraud involves a
combination of risk management techniques.
These techniques include:
o Compensation
o Risk Oversight
o Compensation
o Board Independence
o Board Competence
o Shareholder Rights
o Board Independence
o Risk Oversight
o Shareholder Rights
o Board Competence o Takeover
o Audit-Related
o Takeover Defences
o Environmental/Social
o M&A/Proxy Fights
o Takeover Defense
o Audit-Related
For example, a significant issue many corporate executives face every year is
their annual meeting planning as well as understanding current
shareholder sentiment. Through our annual meeting planning sessions,
we are able to analyze your constituent bases to ensure even the vocal
minority concerns are being addressed and heard.
Based on their shareholder makeup, each company could have different
concerns on both sides of the table. One of the first steps to obtaining
shareholder identification is to conduct a detailed shareholder analysis. We
will identify the constituents; work with your team to build a plan, and create
an outreach program that is in step with your annual
meeting and board reelection efforts.
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 openly and
effectively communicating information and by encouraging shareholders to
participate in general meetings.
Interests of other stakeholders: Organizations should recognize that
they have legal, contractual, social, and market driven obligations to
non-shareholder stakeholders, including employees, investors,
creditors, suppliers, local communities, customers, and policy makers.
Models:
Indian model
The Securities and Exchange Board of India Committee on Corporate
Governance defines corporate governance as the “acceptance by
management of the inalienable rights of shareholders as the true owners of
the corporation and of their own role as trustees on behalf of the shareholders.
It is about commitment to values, about ethical business conduct and about
making a distinction between personal & corporate funds in the management
of a company.”
AT NATIONAL LEVEL:-
On the other hand, there are several areas of self-interest that should
drive companies to embrace more effective governance. These areas are:
However, today we see that private companies are also becoming big in size
and impact.
Very near examples would include joint ventures being organized as private
companies within the insurance industry in India.
Stewardship and accountability of use of funds and assets is
particularly important in public sector.
1. Board of Directors
2. Audit Committee
3. Disclosure Requirements
To certify to the Board that they have reviewed the financial statements and
the same are fair and in compliance with the laws/ regulations and accept
responsibility for internal control systems.