Corporate Governance

Week 7

DELEGATION OF SHAREHOLDER POWER Shareholders are the owner of the joint-stock. and are the principals of that particular corporation. The management directly indirectly selected by the shareholders to pursue such objectives. limited liability Company. the principals (shareholders) define the objectives of the company. By virtue of their ownership. are the agent of shareholders .

shareholders collectively occupy a position of fundamental authority within the firm. .RIGHTS OF SHAREHOLDERS As its owners. The right to transfer assets to another person the right to receive income from those assets and thereby maintain relationships with the firm. Giving rise to certain rights in respect of their assets: The right to make decisions by voting at company meetings.

It Includes all directors elected by Shareholders to represents their interests is vested with the powers of management. .BOARD OF DIRECTORS The great majority of decisions made by a company are made through the Board of Directors and the day to day business of the company is run through the Board of Directors. The Board of Directors of a company is authorized to exercise such power and to perform all such acts and things which as the company entitled to.

BOARD MEMBERS CAN BE DIVIDED INTO TWO CATEGORIES Executive Directors Non-Executive Director .

CHAIRMAN OF BOARD The chairman is the highest office of an organized group such as a board of directors. In Ideal cases the Chairman of the board is from Nonexecutive directors of the board. . The person holding the office is typically elected or appointed by the members of the Board.

. Act in an advising capacity to the CEO. president and other officer on all matter concerning the interest of management & Corporation.THE ROLE OF THE CHAIRMAN The Chairman and the CEO are collectively responsible for the leadership of the Company. The Primary role of the Chairman is for leading the board and ensuring its effectiveness by implementing its decisions.

Evaluating the performance of each board members .Setting Agenda of board meetings . accurate and timely information to board members Train and develop the individual members of board and tailored induction of new director.Ensuring clear.

.RESPONSIBLITIES OF CHAIRMAN Plans and organize all the activities of board of Directors. Work closely and through the CEO on all concerning issues. Chairs the special and Annual meeting of shareholders. industry and the community. Together with the CEO participates in external relationship and various groups including Government .

.May attends all Board committee meeting as non Voting member except in Governance Committee as voting member. Represents Shareholder and board to the management and management to board and Shareholder.

Directors must be individuals. or any other individual elected by the owners of the business entity. insiders or interested directors. managers.EXECUTIVE/INSIDE DIRECTORS Directors are the members of a board of directors. . Directors can be owners. Directors who are owners and/or managers are sometimes referred to as inside directors.

NON-EXECUTIVE/INDEPENDENT DIRECTOR Directors who are not owners or managers and are not connected with the directors. The non-executive directors combine broad business and commercial experience with independent and objective judgment. . or non-executive directors. independent directors. promoters of listed company in any relationship are referred to as outside directors. outsiders. disinterested directors.

It satisfied that no individual or group of Directors has unfettered powers of discretion and that an appropriate balance exists between the executive and Nonexecutive members of the Board. .BOARD BALANCE The balance between non-executive and executive directors enables the Board to provide clear and effective leadership and maintain the highest standards of integrity across the company's business activities.

Executive Directors. .BOARDS APPOINTMENT Appointment of Executive Directors. Appointment of Non.

In most legal systems.APPOINTMENT OF EXECUTIVE DIRECTORS. the appointment and removal of Executive directors is voted upon by the shareholders in general meeting of company .

EXECUTIVE DIRECTORS. The Independent director is appointed for three years cannot be selected for next tenures consecutively Independent directors are appointed usually at the time of annual general meeting on by minority shareholders .APPOINTMENT OF NON.material business relationship with company within last three years and close relationship with the major shareholders etc. government etc . In order to protect the rights of minority shareholders the nonExecutive directors are being appointed and board of any must not have less than 3 or 1/3 which ever is higher independent members of board He must not be the employee .

company. . An individual appointed as CEO of a corporation. or chief executive is the highest-ranking corporate officer (executive) or administrator in charge of total management of an organization.THE CHIEF EXECUTIVE OFFICER A chief executive officer (CEO) /Managing director (MD). organization. reports to the board of directors.

END OF WEEK 7 .

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