Corporate Governance in INDIA

to attend grievances not solved at managerial level and take appropriate action .draw new policies for business and employees • Executive power.Role of Board of Governors • Legislative power. • Judicial power. to formulate bylaws for the company . to appoint executive and empower them to the planned tasks.

• The board is to be represented by an adequate number of executive and non executive directors .Objective of corporate governance • A properly structured board to take independent and responsible decisions . who will represent the interests of all the stakeholders.clearly defined powers . board meetings and board independence.Appointment of qualified and skilled persons to the board .

operational reporting. risk management . strategies . code of conduct • It informs the share holders of all the relevant developments.Objective of corporate governance contd. • It takes transparent decisions and adopts such procedures that are un ambiguous • It has effective machinery and policy instruments to safeguard the interests of the stake holders . and audit .

operational reporting. • It remains in effective control of the company at all times . • It is always vigilant and monitors the functioning of the management . Board independence .Objective of corporate governance contd.

Bigbulls etc… lead to many issues.Emergence of corporate governance code • Enrons . • To fill gap mandatory and non mandatory stipulations came. .

Stewards of corporate Governance • • • • • • Ministry of corporate affairs Securities and exchange board of India National Federation for corporate governance The Institute of charted accountants of India The institute of company secretaries of India Association of chamber of commerce and industry .

Stewards of corporate Governance • The confederation of indian industry • Federation of indian chambers of commerce and industry .

scandals • Need : need to regulate corporate governance came and CII was formed in 1996-98 • 1999 SEBI – appointed committee to recommend corporate governance code.Misgovernance and corruption • Issues – industrial licences. corruption culture. import licences.money abroad .all listed companies came under SEBI and Code . Tax evasion .

and managers. • Legislation. It clearly identifies roles .The board must function under the legislative and regulatory framework to render effective governance . executives. and accountability of the directors.responsibilities. The board takes responsibility for the policies and decisions of the company .Features of good governance • Role and powers of the board.

. from the directors to the executives . down to employees and investors. The code of conduct of the organisation is issued to all. It must be clearly understood by all the stakeholders and there should be a periodic review and evaluation of it.Features of good governance • Code of conduct .

The board is also capable of objectively assessing the management and the commercial activity of the company. .Features of good governance • Board Independence . Independent and professional governance is the cornerstone for good administration.

Features of good governance • Board skills. adventure creates high motivation and clear objectives . govt functioning knowledge.freedom. financial.operational expertise • Management environment .technical. legal . openness .therory. the board members must posses diverse qualities.

selection must be based on the highly competent • Board induction and training . • Board meeting . the meetings must be planned .Features of good governance • Board positions . directors must be knowledgeable about all the governance issues. . and the minutes maintained professionally.the agenda discussed before hand.

short and long term strategy setting must be documented. corporations are public persons and they can not function outside of society.Features of good governance • Strategy setting .These must be achievable and must have measurable performance targets and milestones • Business and community obligations .society must be aware of the company’s plans and the way it carry out. .

it discharges duties impartially with out conflict of interest and presents an objective picture of the financial status of the company.. .Features of good governance • Financial and operational reporting. • Audit committee. mandatory and non-mandatory gudielines which company must comply with SEBI. it is responsible for the examination of the financial health of the company and monitors the internal auditors.

Features of good governance • Risk Management . . the procedure must be clearly laid down to identify . analyse and measure risks. The board is ultimately responsible for all the risks it takes and is answerable to the shareholders.