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CORPORATE GOVERNANCE

Rizvi Institute of Management Studies and Research 2013

Evolution
Pataliputra

In the happiness & well being of the subject, is the well being of the King

Kautilyas four fold duty of a king


1. 2. 3. 4. Raksha Vriddhi Patna Yogakshema - Protection - Enhancement - Maintenance - Safeguard - Shareholders Wealth - Wealth through proper utilization of Assets - Of that Wealth - Interest of shareholders

Introduction
What is Corporate Governance ? It means governing a company in a value based manner Objective Enhancement of shareholders value keeping in view the interest of other stakeholders Key Constituents Shareholders Board of Directors Management

Importance
The ultimate measure of success is the creation of wealth for our shareholders Georgia Pacific - leading manufacturer

No man is good enough to govern another man without the others consent Abraham Lincoln -16th President of the USA

Punishment in case of Non Compliance of certain clauses in Corporate Governance

1. Punishment for fraud

2. Punishment for false statement


3. Punishment for false evidence

4. Punishment in case of repeated defaults


5. Punishment where no specific penalty or punishment is provided

About Satyam

What went wrong

Clause 49 of The Listing Agreement Issue 1: Whistle Blower Policy

Issue 2: Subsidiary Companies


Issue 3: Risk Management

Ministry of Corporate Affairs - Guidelines 2009

BOARD OF DIRECTORS A. APPOINTMENT OF DIRECTORS - Appointment of the Board

- Separation of Office of Chairman & CEO


- Nomination Committee

- Number of Companies in which an individual can become a Director

Ministry of Corporate Affairs - Guidelines 2009

B. INDEPENDENT DIRECTORS
- Attributes for independent director - Tenure of independent director C. REMUNERATION OF DIRECTOR - Guiding principle - Remuneration of NED - Remuneration of independent director - Remuneration committee

Ministry of Corporate Affairs - Guidelines 2009

RESPONSIBILITY OF THE BOARD


- Training of Directors

- Enabling Quality Decision making


- Risk Management - Board to place Systems to ensure Compliance with Laws

Ministry of Corporate Affairs - Guidelines 2009


AUDIT COMMITTEE OF BOARD - Constitution - Enabling Powers - Role and Responsibilities AUDITORS - Appointment of Auditors - Certificate of Independence - Appointment of Internal Auditor

SECRETARIAL AUDIT
INSTITUTION OF MECHANISM FOR WHISTLE BLOWING

WHISTLE BLOWER POLICY


Components of a Whistle-Blower Policy Impacts of unblown whistles Benefits of a whistle-blower policy

CADBURY REPORT
Reasons for setting up the Committee Accountability of Boards to Shareholders Formal relationship between the shareholders and the board of directors Proposals Sharing of Views delegation of their responsibilities

Sarbanes and Oxley Act


major failures of corporate governance and accounting loss of public trust in accounting and reporting practices reestablishment of public trust transgressions of good corporate governance directors remuneration , misuse of company funds, insider dealing in company shares, misrepresentation of the true earnings