CORPORATE GOVERNANCE

Corporate Governance is a Customer

relationships among various SHARE HOLDERS

participants in determining the

direction and performance of a suppliers
corporation with the effective and
community
management of relationships
among
Creditors
Employee
CORPORATE GOVERNANCE IN INDIA
1. CORPORATE GOVERNANCE COMES IN INDIA IN 1956 ACCORDING TO COMPANIES
ACT.
2. INDIA HAS 20 MILLION OF SHARE HOLDER, WHICH IS ONE OF THE LARGEST
EMERGING MARKET IN TERM OF CAPITALISATION.
3. IN 1996 (CII) CONFEDERATION OF INDIAN INDUSTRY TOOK SPECIAL IMITATIVE
ON CORPORATE GOVERNANCE.
4. IT IS FORMED TO BALANCE THE POWER AND DECISION MAKING BETWEEN
BOARD OF DIRECTOR ,EXECUTIVE AND SHARE HOLDER IN INDIAN
ORGANISATION
5. ACCORDING TO CII IT HELPS TO PROTECT THE INVESTOR INTEREST, ESPECIALLY
THE SMALL INVESTOR, THE PROMOTION OF TRANSPARENCY WITH THE
BUSINESS AND INDUSTRY
 Better access to external finance. Reduced risk of corporate crisis and scandals.

Why
Corporate
Governance?
Lower costs of capital – interest rates on Higher firm valuation and share
loans. performance.

Improved company performance

sustainability.
PRINCIPLES OF CORPORATE GOVERNANCE
1. SUSTAINABLE DEVELOPMENT OF ALL STAKEHOLDERS-
TO ENSURE GROWTH OF ALL INDIVIDUALS ASSOCIATED WITH OR EFFECTED BY THE
ENTERPRISE
ON SUSTAINABLE BASIS.
2. EFFECTIVE MANAGEMENT AND DISTRIBUTION OF WEALTH-
FOR PROVIDING MAXIMUM BENEFITS TO ALL STAKE HOLDERS AND ENHANCING ITS WEALTH
CREATION CAPABILITIES TO MAINTAIN SUSTAINABILITY.
3. DISCHARGE OF SOCIAL RESPONSIBILITY-
TO ENSURE THAT ENTERPRISE IS ACCEPTABLE TO THE SOCIETY IN WHICH IT IS FUNCTIONING.
4. APPLICATION OF BEST MANAGEMENT PRACTICES-
TO ENSURE EXCELLENCE IN FUNCTIONING OF ENTERPRISE AND OPTIMUM CREATION OF
WEALTH ON SUSTAINABLE BASIS.
PRINCIPLES OF CORPORATE GOVERNANCE

5. COMPLIANCE OF LAW IN LETTER & SPIRIT-

TO ENSURE VALUE ENHANCEMENT FOR ALL STAKEHOLDERS GUARANTEED BY
THE LAW FOR MAINTAINING SOCIO-ECONOMIC BALANCE.
6. ADHERENCE TO ETHICAL STANDARDS-
TO ENSURE INTEGRITY, TRANSPARENCY, INDEPENDENCE AND ACCOUNTABILITY
IN DEALINGS WITH ALL STAKEHOLDERS.
FOUR PILLARS Accountability Fairness

OF

CORPORATE
GOVERNANCE Transparency Independence
 Accountability Fairness Transparency Independence

1. Ensure timely, 1. Procedures and

accurate disclosure structures are in
1. Protect Shareholders
on all material place so as to
rights
matters, including minimize, or avoid
1. Ensure that management is the financial completely conflicts
accountable to the Board. 2. Treat all shareholders
situation, of interest
including minorities,
performance, Independent
2. Ensure that the Board is equitably
ownership and Directors and
accountable to shareholders corporate Advisers i.e. free
3. Provide effective
governance. from the influence of
redress for violations
others.
ELEMENTS OF CORPORATE GOVERNANCE

1. GOOD BOARD PRACTICES

2. CONTROL ENVIRONMENT
3. TRANSPARENT DISCLOSURE
4. WELL-DEFINED SHAREHOLDER RIGHT
GOOD BOARD PRACTISE
1. THERE SHOULD BE APPROPRIATE BOARD PROCEDURE.
2. THERE SHOULD BE CLEARLY DEFINED ALL THE ROLES AND AUTHORITIES
AMONG ALL THE MEMBERS OF ORGANIZATION.
3. THERE SHOULD BE UNDERSTOOD THE DUTIES AND RESPONSIBILITY OF
DIRECTOR IN ORGANIZATION
4. BOARD SHOULD BE WELL STRUCTURED.
5. THERE SHOULD BE APPROPRIATE COMPOSITION OF MIX SKILL.
6. THE REMUNERATION OF DIRECTOR LINE WITH BEST PRACTISE.
7. DIRECTOR SHOULD BE SELF-EVALUATION AND CONDUCT TRAINING WHEN
THERE IS NEEDED
CONTROL ENVIRONMENT
1. THERE SHOULD BE INTERNAL CONTROL PROCEDURE IN ORGANIZATION
2. THERE SHOULD BE RISK MANAGEMENT SYSTEM IN PLACE
3. THERE SHOULD BE DISASTER RECOVERY MANAGEMENT IN PLACE
4. MEDIA MANAGEMENT TECHNIQUE SHOULD BE USED
5. INTERNAL AUDIT FUNCTION
6. INDEPENDENT AUDIT SHOULD BE ESTABLISHED
7. INDEPENDENT EXTERNAL AUDITOR CONDUCT AUDIT
8. THERE SHOULD BE MANAGEMENT INFORMATION SYSTEM ESTABLISHED
TRANSPARENCY DISCLOSER
1. THERE SHOULD BE DISCLOSER OF ALL THE FINANCIAL INFORMATION
2. THERE SHOULD BE DISCLOSER ALL THE NON-FINANCIAL INFORMATION
3. THE ACCOUNTING SYSTEM SHOULD BE PREPARE ON THE BASIS OF IFRS
(INDIAN FINANCE STANDARD REPORT)
4. THERE SHOULD BE FILLING OF REGISTER UP TO DATE.
5. THERE SHOULD BE PUBLISH HIGH QUALITY ANNUAL REPORT OF
ORGANIZATION
WELL-DEFINED SHARE HOLDER RIGHT
1. THERE SHOULD BE FORMALISED THE MINORITY SHARE HOLDER RIGHT.
2. THERE SHOULD BE WELL ORGANISED SHARE HOLDER METTING.
3. THERE SHOULD CLEARLY DEFINE THE DIVIDEND POLICY AMONG ALL THE
MEMBERS AND SHARE HOLDER.
4. THERE SHOULD BE VOTING RIGHT IN GENERAL MEETING
5. THERE SHOULD BE TRANSFER SHARE FROM ONE PERSON TO ANOTHER
PERSON
6. THE RIGHT TO SELL THEIR STOCK IN MARKET
7. THEY HAVE RIGHT TO GET INFORMATION ABOUT THE COMPANY
CORPORATE GOVERNANCE ISSUES
1. PERFORMANCE EVALUATION OF DIRECTOR.
2. TRUE INDEPENDENCE DIRECTOR
3. REMOVAL OF INDEPENDENT DIRECTOR
4. ACCOUNTABILITY TO SHARE HOLDER
5. EXECUTIVE COMPENSATION
6. RISK MANAGEMENT
7. PRIVACY AND DATA PROTECTION
8. SUCCESSION PLANNING