• History

• De f i n i t i on
CORPORATE •
•
G ov e r n a n c e
Parties

GOVERNANCE •
•
Objectives
El e m e nt s
• Cl a u s e 4 9
 HISTORY
 Kautilya’s(Chanakya) Arthashastra is the oldest book (around 300 B.C) on
Management available to the world
 This masterpiece covered a wide range of topics and also recommended that
– the king shall not consult with any advisor who had a vested interest in the
outcome of a particular project.
– establishment of an ethical code of conduct—a topic which has received a
great deal of attention now during the past few years after corporate scandals 
– the codification of accounting rules into one uniform system to prevent
problems in translating financial data between disparate methods of
accounting – a subject which  the international accounting community is
dealing with in terms of the convergence of accounting standards.
 In the western world The East India Company introduced a Court of Directors,
separating ownership and control (U.K., the Netherlands) in 1600s
 DEFINITION

• “Corporate Governance is the system by

which companies are directed and
controlled…”
– Cadbury Report (UK), 1992
• “…to do with Power and Accountability:
who exercises power, on behalf of whom,
how the exercise of power is controlled.”
• Sir Adrian Cadbury, in Reflections on Corporate
Governance, Ernest Sykes Memorial Lecture, 1993
 GOVERNANCE

• The Manner in which a Corporation is Run

– Achieving its Objectives
– Transparency of its Operations
– Accountability & Reporting
– Good Corporate Citizenship
• The Processes & Operating Relationships that
Best Achieve Organisational Goals
 FRAMEWORK

1. Supervisory Board/ Committee/ Team

2. Audit Committee
3. Internal Audit
4. Statutory Audit
5. Disclosure of information
6. Risk management framework
7. Internal Control framework
8. Whistle blower policy
 OBJECTIVES

1. Strengthen management oversight functions and accountability

2. Balance skills, experience and independence on the board appropriate to the
nature and extent of company operations
3. Establish a code to ensure integrity
4. Safeguard the integrity of company reporting
5. Risk management and internal control
6. Disclosure of all relevant and material matters
7. Recognition and preservation of needs of shareholders
 PARTIES

1. Board of directors
2. Managers
3. Workers
4. Shareholders or owners
5. Regulators
6. Customers
7. Suppliers
8. Community (people affected by the actions of the organization)
 PRINCIPLES

Openness

Integrity

Accountability
 ELEMENTS

Law

Ethics

Wealth Maximization
 CLAUSE 49 LISTING AGREEMENT

• The Listing agreement was first introduced by Bombay Stock Exchange and
later followed by other stock exchanges
• SEBI, vide its circular dated February 21, 2000, specified principles of
corporate governance and introduced a new clause 49 in the Listing
agreement of the Stock Exchanges.
• The Listing agreement contains 51 clauses
• Listing means admission of the securities to dealings on a recognised stock
exchange. The securities may be of any public limited company, Central or
State Government, quasi governmental and other financial
institutions/corporations, municipalities, etc.
• Listing helps in free transferability , leads to transparency in disclosure of
information and ensures official quotation is available. 
THANK YOU