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Corporate Governance

Presenting by, Vikas Patro

What is Corporate Governance ? Corporate Governance refers to the structures & processes for the efficient & proper direction & control of companies (both private and public) in the interest of all stakeholders. .

one size does not fit all.Is a concept.CORPORATE GOVERNANCE What is Corporate Governance ? . HOWEVER: .Basic Principles of Corporate Governance:  Accountability  Transparency  Fairness  Integrity Rights of Shareholders Interests of Stakeholders Good Faith Trust Diligence Disclosure Commitment  Responsibility Controls .

CORPORATE GOVERNANCE Corporate Governance Framework  Governance Principles Legal / Regulatory Codes of Best Practice Stakeholder Relations Self Regulation Ethical Standards Risk Management       .

introducing Codes of Ethics etc • • • • Impacts on the society as a whole: Better companies. .limiting discretionary decision making.CORPORATE GOVERNANCE Why Corporate Governance Matters • Enhances performance of companies Enhances access to capital Enhances long term prosperity. increasing oversight. Provides a barrier to corrupt dealings. Better societies.

1999 .CORPORATE GOVERNANCE Good Corporate Governance and Good Public Governance are complementary “ The proper governance of companies will become as crucial to the world economy as the proper governing of countries”. James Wolfensohn President of WB.

CORPORATE GOVERNANCE Corporate GovernanceChannel of Growth & Development Country level Sector level Individual firms .

high growth & creation of more jobs • Better allocation of resources • Better management creating wealth • Reduces the risk of financial crisis • Better relationship with all stakeholders .CORPORATE GOVERNANCE Corporate GovernanceChannel of Growth & Development • Increases access to external financing leading to larger investment.

CORPORATE GOVERNANCE Corporate GovernancePrinciples for the Public Sector • Generally derived from the private sector • Ensures public accountability • Promotes responsive and accountable institutions • Good financial management of resources • Good stewardship – – Responsibility to protect the wealth of the state and its citizens – Maintain and safeguard it in the interest of the citizens .

CORPORATE GOVERNANCE Good Governance by Private Sector • Institutional Framework • Role of Board of Directors • Management • Risk factors • Transparency & Disclosure • Reputation .

CORPORATE GOVERNANCE Good Governance by Investment Promotion Agencies • Self Regulation • Transparency & Disclosure • Accountability • Commitment • Sound and Clear Administrative Policies • Stakeholder engagement .

CORPORATE GOVERNANCE Good Governance by Foreign Investor • Good faith • Business Integrity • Governance Policies • Human Capital • Corruption Practices .

If a country opts for lax accounting and reporting standards.CORPORATE GOVERNANCE Conclusion “ If a country does not have a reputation for strong corporate governance practice. capital will flow elsewhere. Markets exist by the grace of investors. If investors are not confident with the level of disclosure. And it is today’s more empowered investors that will determine which companies and markets will stand the test of time and endure the weight of greater competition.suffer the consequences. All enterprises in that country- regardless of how steadfast a particular company’s practices may be. It serves us well to remember that no market has a divine right to investors’ capital . capital will flow elsewhere. capital will flow elsewhere.