Corporate Performance & Planning

Introduction
Corporate Charter
 Corporate Performance & Planning

“ Course Outline”
-Corporate Performance /scope
-Performance evaluation as a Tool if management Procedure
-Review of Systems of control
-Corporate objectives, Strategies Plans & performance
-Evaluation of Working papers.
-Evaluation of overall performance /Analysis of Financial
position
-Ratio analysis, Corporate Budgeting
-Determining source of Purchases. Purchase price
-Appraisal of Production management
-Quality control management R & D
 Corporate Performance & Planning

Learning outcomes
Introduction to the following

-The Corporate history Definitions

- Incorporation .Articles & Memorandum Characteristics /Legal
status, characteristics .
-The Shareholders .Stakeholders ,Owners ,Beneficiaries
-Corporations in Pakistan
-The Registrar of joint Stock companies
-The’ Board of Directors ‘.Internal & External / Functions ,Roles,
Responsibilities Executive / Non executive directors
- Corporate Management , Governance & Performance
 Corporate Performance & Planning

  The “Corporate ”
A Historical Perspective
“‘Society of merchants "
“Corporations historically were fictional entities, invented
by nobility, to enable them to hold Authority Without
Responsibility.”
The British monarchy issued a ‘Charter ’in favor of
” British East India Company” Granting them monopoly on
trade The Company which was “a society of merchants "
symbolized the rich potential of the corporation,
as well as new methods of business.
-The’ shareholders’ in the East India Company were subsequently
able to earn huge profits through the trade,
.
 Corporate Performance & Planning

The “Limited Liability legislation”

The British Parliament subsequently in 1844 legislated -

- The ‘Joint Stock Companies Act,’ which allowed ‘Businesses companies

‘to’ incorporate’ without a “Royal charter “or under an Act of Parliament.
Ten years later, the
“limited liability,” the key provision of modern corporate law, was passed
as a law: in response to pressure from emerging capital interests,
The Act established the principle that any corporation could enjoy limited
‘legal liability’ on both “contract “ and “tort “claims simply by registering
as a "limited" company with the appropriate government agency. ’In
Pakistan the authority rests with the “Registrar joint Stock companies”
 Corporate Performance & Planning

The “Corporate Law “

“Evolution /Public interest”

- In Mid 19th century the Corporate law was promulgated

which focused on protection of the “public interest,
“and not just the interests of corporate shareholders.
- Forming a corporation usually required an act of
legislation & the Corporate charters were regulated by
the state.
- “Investors “ generally had to be given an equal say in
companies,
- Corporations were required to comply with the purposes
expressed in their charters
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“ Corporations /Features”
“ Individuality’ ’ Immortality’.
By the beginning of the 19th century, government policy
began to change globally ,reflecting the growing popularity
of the corporations .
- In 1819, the U. S. Supreme Court granted corporations,
rights that had not previously recognized . 
- Corporate charters were deemed "inviolable", and
not subject to arbitrary amendment or abolition by state
governments. 
-The Corporation as a whole was labeled an "artificial
person", possessing both ‘individuality’ and’
immortality’.
 Corporate Performance & Planning

“Modern Corporation”
The 20th century saw a proliferation of laws across the
world, which helped to drive economic booms in many
countries before and after World War I.
-Starting in the 1980s, many countries with large state-
owned corporations moved towards privatization,
the selling of publicly owned or 'nationalized' services
and enterprises to corporations or Deregulation
(reducing the regulation of corporate activity) .
Another major postwar shift was toward the
development of conglomerates, when large
corporations purchased smaller corporations to expand
their industrial base.
.
Corporate Performance & Planning

“Modern Corporate”
“ Definition”
“A Corporate is a “ legal entity “ formed into an
association and endowed by law with the
rights and liabilities as of an individual and
termed as Incorporated”
 Corporate Performance & Planning

“ Corporations” The Business capitol

-Corporation’s capital consists of several units called’
shares’ which are sold to a large number of persons
-The “shares” are freely “transferable”, the transfer of
shares from one person to another ,does not effect the
company
-The” shareholders” have a “separate entity”.
-Shareholders have no liability towards the company's debts
- Shareholders are liable only to the extent of the
par value of the share held by them
 Corporate Performance & Planning

The ‘ Shareholders’
A corporation in theory is owned and controlled by
its “Members.”
-In a joint-stock company the members are known as
"shareholders” and each of their shares in the ownership,
-The control and profits of the corporation is determined
by the portion of shares in the company that they own.
-Thus a person who owns a quarter of the shares of a joint-
stock company owns a quarter of the company, is entitled
to a quarter of the profit given to shareholders as
Dividend (or at least a quarter of the profits) and has a
quarter of the votes capable of being cast at AGM,
Annual General meeting of the company shareholders.
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The “Share holders “ Rights

-Since a corporation is created (incorporated) by a group of
shareholders who have ownership of the corporation, represented
by their holding of common stock.
-The Share holders are entitled to a share in the profits, paid as
Dividend and/ or the appreciation of stock,
-Share holders are not held personally liable for the
company's/corporations debts/liabilities..
-The Shareholders elect a Board Of Directors BOD (generally
receiving one vote per share)
-The B.O.D oversees management of the corporation
through dividends and/ or the appreciation of stock,
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The “ Stakeholders”
The Stakeholders of a corporation are ‘all those who are
effected directly or indirectly by the “companys activities”
in general as cited below have legal rights i.e. the rights
of interested parties e.g.;
- The Employees,
- The Community,
- The Suppliers,
- The Customers
- The Regulator's etc.
- The Market/environment
Its incumbent to encourage co-operation between the
company and its stakeholders in creating
-Wealth, jobs and Economic stability
 Corporate Performance & Planning

‘ Corporations“ Characteristics
- A ‘corporation’ is a form of a business ownership
- “Corporation is a “ legal entity “ that is separate and
distinct from its owners.
- ‘Corporations’ enjoy most of the rights and
responsibilities that individuals possess.
- Corporations can enter contracts ,lend and borrow
money
- Corporate can ‘sue and be sued’ in a court of Law
Corporations can hire employees own assets and pay
taxes .
 Corporate Performance & Planning

Corporation/ ‘ Company “ Sum up

- A corporate ,company is deemed to have a indefinite perpetual life Just as a
individual has a signature a distinctive “ Common seal’ .
- A contract entered by the company/ ,corporate must have a common seal affixed
to make it binding on the company.
- The management of the company is entrusted to people called ‘Directors’ who are
answerable to the shareholders-
-It is Separate and distinct from its owners, enjoys most of the rights
and responsibilities that an individual possesses;,

Has the right to enter into contracts,legal Right to borrow &,Lend money, Can sue ,
be sued, in a competent court of Law- Can hire employees, Can own assets and
pay taxes. under the law 
.
 Corporate Performance & Planning

“ Articles of Association”
“ Articles of association” is a document that specifies the
regulations for a company's operations and its
purpose.
Design to accomplish tasks within the organization,
including the process for appointing directors and handling
financial records.
Articles of association is a user's manual outlining the
methodology for accomplishing necessary day-to-day tasks.

The content of the “Articles" may vary by jurisdiction,

but typically include the company's name its purpose,&
Organization the share structure, and provisions
concerning shareholder meetings.
Corporate Performance & Planning

‘ Corporations’ in Pakistan

A ‘Company’ as per law adopted in Pakistan is defined as:

“An ‘association of individuals formed for the purpose of
earning profit possessing a common capital contributed
by the members constituting it”,

Such capital being commonly Divided into shares, of

which each possesses one or more which are transferrable
by the owner”

-Section 2 of the Companies Act 1984

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‘ Modern Corporation ‘
‘Articles of Incorporation’- Bye Laws
-The law of the jurisdiction in which a corporation
operates will regulate most of its “internal activities as
well as its” Finances”.

- When a corporation operates outside its home state,

It is often required to register with other government as

a Foreign corporation, and is almost always subject to
laws of its host state pertaining to Employment
Contracts crimes, and , civil actions.
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The ‘ Modern Corporation “

‘Articles of Incorporation’- Bye Laws’
A corporation in Pakistan files ”articles of incorporation
with the government, declaring
-The general nature of the corporation,

-The amount of ‘stock’ ( shares) it is authorized to issue,

and the names and addresses of directors.
-The article of incorporation is approved,

The Corporation's Directors meet to create the by laws 

that govern the internal functions of the corporation,
 Corporate Performance & Planning

The Corporation
“ Articles of incorporation, &“The ‘constituents
The corporation charter, also known as ‘Articles of
incorporation,’ is the legal instrument used to establish a corporation, is a
written document filed by the founders of a corporation detailing the major
components of a company such as
- The Company's objectives,
- The Company's structure and
- The Company's planned operations
- The “Shareholders” – Are those who own the company
- The” Directors “ Are Guardians of the Company’s assets for the
Shareholders The “ Managers” Are one who use/ manage the
‘Company’s assets’
.
 Corporate Performance & Planning

The “Incorporation“ Pakistan

-Registration is the main prerequisite to the corporation's
assumption of limited liability.

-The law requires the corporation to designate its principal

address, as well as a registered agent  (a person or company
designated to receive legal service of process).
-It may also designate an agent/ other legal representative of
the corporation
-Corporations in Pakistan are registered with the
'Registrar Joint Stock Companies’ and regulated by the
laws enacted by the government.namely SECP
 Corporate Performance & Planning

“Articles of Incorporation”
“ Title/ Name “
The Articles of incorporation are a set of documents filed with the
government body,” Registrar Joint Stock Company in case of Pakistan so
to legally document the creation of a corporation.
The Articles of incorporation contain information, of the firm’s name,
address,  and the amount and type of stock to be issued.
The Articles of incorporation are also referred to as the “Corporate charter,“
“Articles of association," and a “Certificate
of incorporation." issued after the fulfillment of the legal requirements In
Pakistan "Incorporated" or "Inc." for the limited liability of its members for
example, "Limited" or "Ltd.".
 Corporate Performance & Planning

‘ Modern Corporation ‘Title/Name

“ In Pakistan ‘

- In Pakistan the word” Corporation ” is mandatory.

-Their use puts everybody on constructive notice that the
entity has  limited liability :
- Meaning One can only collect whatever assets of the
entity owns/controls when one obtains a Court judgment
against it.
- Some countries do not allow the use of the word
"company’ to denote corporate status, since it may refer
to a partnership or some other form of collective ownership
 Corporate Performance & Planning

“ Corporate Performance “
Corporate performance refers to a composite assessment of how
well an organization executes on the following important
parameters, typically
“Financial, market and shareholders performance.”
Corporate performance analysis is a subset of
“Business Analytics and Business intelligence “ concerned with the
“Financial Health" of the organization, which has traditionally been
measured in terms of financial performance. in recent years, the
concept of corporate health has become broader
 Corporate Performance & Planning

Corporate Performance
“Key Performance Indicators”
Like the concept of  “business sustainability and the
corporate health is now considered to involve not only
financial considerations but also other factors including :

- Social Responsibility
- Social reputation & innovation besides

- Employee morale and  Productivity

.
Corporate Performance & Planning

- Corporate Performance –
‘Key Performance Indicators’ KPI
Corporate Performance thus is no longer 
measured only on the following ’key performance
indicators’ (KPI) such as
-Revenue,
-Return on investment (ROI),
-Overhead and operational costs. 
 Corporate Performance & Planning

“ Corporate”
The “Objectives”
- “A corporation may/does not necessarily operate to
earn profit,”
- When one purchases stock/shares of a company,
he/she becomes ‘part owner ‘of that corporation. 
- The vast majority of corporations however are
incorporated and setup with the goal of providing
a‘ return ‘for its shareholders./stakeholders
 
 Corporate Performance & Planning

“Corporate Financial Performance “

The Corporate performance management includes
overseeing the following Financial functions :-
 - Forecasting ,
- Corporate Budgeting &
- Corporate Planning .
Performance results are often shared publicly rather
than only with financial  stakeholders and investors, as
was formerly the case.
 Corporate Performance & Planning

“Corporate Performance“ Budgeting”

Corporate budgeting is the process of “business estimates/
finances for a future period plans operations accordingly.
Developing a corporate budget, a business usually starts with
a project plan, then determines the amount of time, goals
and costs of the project. Budgeting involves creating a
definite and detailed financial plan .
Budgeting is to establish financial objectives for the coming
year and identify exactly what has to be done to accomplish
these objectives. Budgeting encourages a business to
articulate its vision, strategy, and goals.
Budgeting imposes discipline and deadlines on the planning
process.
 Corporate Performance & Planning

“Corporate Performance “ Management controls”

‘Budgets also serves a ‘management-control functions.’
Achieving the ‘financial goals ‘and objectives of the
business requires comparing “actual performance “against
benchmarks and holding “individual managers “responsible
for keeping the business on schedule to achieve its
financial objectives.

By using budget targets as benchmarks, managers can

closely monitor progress toward (or deviations from)
the budget goals and timetable.
 Corporate Performance & Planning

“Corporate Performance “ Management controls”

Significant variations raise “red flags,” in which case
business unit heads can determine that performance is
off course or
-That the budget needs to be revised because of
unexpected developments.
-By using budget targets as benchmarks, companies
monitor progress toward (or deviations from) the budget
goals and timetable.
Corporate Performance & Planning

-The Corporate “Management “

The “Board of Directors “
BOD
 Corporate Performance & Planning

‘ Board Of Directors ’
What are good Board Practices ?

-There should be Clearly defined roles and authorities

-The Duties and responsibilities of Directors are

well understood

-The Board is well structured

-The Board should have Appropriate composition
and mix of skills
 Corporate Performance & Planning
The Management
The Board of Directors-BOD

“Executive and Non-Executive directors,”

The day to day activities of a corporation is managed
by individuals appointed by the members. which is
characterized as the “ Board of Directors “

-The Board of Directors is composed of both ‘

Executive and Non-executive directors’,

-The Non executive directors are meant to supervise

the former's management of the company.
 Corporate Performance & Planning

B.O.D
“Non Executive Directors”
A non-executive director typically does not engage in
the day-to-day management of the organization
A Non Executive.Director is however involved in policy
making and other strategy/planning initiatives.
A non-executive director's responsibilities also include
 the monitoring of the executive directors and
acting in the interest of the company's Stakeholders.
Corporate Performance & Planning

B.O.D
“Executive Directors”
The executive director of a company is a Senior
operating officer or manager of an organization /
corporation,
In modern corporations / company’ Organogram’ the
Chief Executive Officer” ,C.E.O role Heads the group
of other executive directors of the company
The CEO and the “ executive directors” are responsible
for managing steering the organizations financial &
administrative operations its operations.
 Corporate Performance & Planning

“Board Of Directors”
“ Non Executive Directors”
The Board of Directors is composed of both executive
and “non-executive directors”,
-The Non executive directors are entrusted to supervise the
former's management of the company. through a
“Management Committee”
- A two-tiered committee structure with a
Board of Directors and "Management Committee”  
is common in Pakistan
 Corporate Performance & Planning

“Board of directors ‘
The Management
A “Single Committee” ‘BOD’

The Corporations are controlled /managed by a

"Committee “ or by “Committees “where the activities are
controlled by “individuals “appointed by the members.
. There are two kinds of “Committee structures.”
A single committee known as a’ Board of directors’ 
is the method favored in most common law countries.
 Corporate Performance & Planning

“Corporate Performance ”
“Financial & Non Financial management
The Non-financial areas refer to & are monitored for ‘corporate
performance management ‘and reporting which include
- Strategic Planning
-The Processes and Efficiencies management
- Brand equity , management
- Risk management and
- Human Resource management .
 Corporate Performance & Planning

“Corporate Governance”
What refers to corporate governance?
‘Corporate governance ‘ can be defined as a relationship
among stake holders that is used to determine and control
strategic direction and performance of the business
organizations
“It is used in corporations to establish order between
the companies owners and its top level managers ,
 Corporate Performance & Planning

“Corporate Governance “History:

Contemporary corporate governance started in 1992 based
on with the Cadbury report in the UK
-Cadbury was the result of several high profile company
collapses
-Is concerned primarily with protecting weak and widely
dispersed shareholders against self-interested Directors
and managers
- Its primarily concerned with public listed companies i.e.
those which are listed on a Stock Exchange Focused on
preventing corporate
 Corporate Performance & Planning

‘Corporate Governance’
The Four Pillars
The following attributes are characterized
as the four pillars in a Corporate Governance
relationship
- -Accountability
- Fairness
-Transparency
- Independence
 Corporate Performance & Planning

“ Four Pillars of Corporate Governance”

- Accountability
Ensure that management is accountable to the Board &
Ensure that the Board is accountable to its shareholders
- Fairness
Protect Shareholders rights
Treat all shareholders including minorities equitably
Provide effective redressal of violations
 Corporate Performance & Planning

Four Pillars of Corporate Governance

-Transparency
Ensure timely, accurate disclosure on all material
matters, including the financial situation,
performance, ownership and corporate governance

- Independence
Procedures and structures are in place so as to minimize,

or avoid completely” conflicts of interest”

Independent Directors and Advisers i.e. free from the
influence of others
Corporate Performance & Planning

Sustainability ?
No generally accepted definition
Most commonly used is from the Brundtland
Report for the World Commission on Environment
and Development 1987 which defines it as ;

‘Development that meets the needs

of the present without compromising
the ability of future generations
to meet their own needs’
Corporate Performance & Planning

‘ Elements of Corporate Governance ‘

-Good Board practices

-Control Environment

-Transparent disclosure

-Well-defined shareholder rights

-Board commitment
 Corporate Performance & Planning

“Corporate Performance “The Scope

Performance management is about managing the
organization. ...
Managers and their teams are jointly accountable for
results and are Jointly involved in agreeing what they
need to do and how they need to do monitor the
companies performance & in taking action.to achieve
the objectives of the business in terms of its Vision
/Mission statement
 Corporate Performance & Planning

“ Control Environment”

-Internal control procedures

-Risk management framework present
-Disaster recovery systems in place
-Media management techniques in use
-Business continuity procedures in place
-Independent external auditor conducts audits
-Independent audit committee established
-Internal Audit Function
-Management Information systems established
-Compliance Function established
Corporate Performance & Planning

“Transparent Disclosure”

The BOD should ensure that :

-The corporate’s Financial and Non-Financial Information
is properly disclosed
-Financials prepared according to International
Reporting Standards (IFRS)
-Companies Registry filings are up to date
-High-Quality annual report published
-Web-based disclosure
Corporate Performance & Planning

“Well-Defined Shareholder Rights”

-Minority shareholder rights formalized

-Well organized shareholder meetings conducted

-Policy on related party transactions

-Policy on extraordinary transactions

-Clearly defined and explicit dividend policy

Corporate Performance & Planning

“ Board Commitment”
Corporate governance committee.
-The Board discusses corporate governance issues and
has created a corporate governance committee

- The company should have corporate governance champion

- A corporate governance improvement plan has been

created

- Appropriate resources are committed to corporate

governance initiatives
Corporate Performance & Planning

Board Commitment
Corporate governance
-Policies and procedures have been formalized
distributed to relevant staff

-A corporate governance code has been

developed

-A code of ethics has been developed

-The company is recognized as a corporate
governance
Corporate Performance & Planning

“ Business Ethics”

“Established values and principles a company

uses to inform and conduct its activities”

The company strives /:

-Should permeate the company’s culture and
drive its strategy, business goals, policies and
activities usually found in a code of ethics
Corporate Performance & Planning

“ Interactive session

Q/A
Corporate Performance & Planning

Books Recommended for reading by

KUBS
“ The Quality Audit”
McGraw Hills Publications l

“Effective performance management “

Leehatt, Pitman
 Corporate Performance & Planning

“The Assignment”
Report & Requirement

As a requirement for the completion of final evaluation the

students are required to:-
-Select a corporate business entity/company & prepare and
submit a Report with a focus and conclusion on the:-

“ Corporations Objectives ,planning & Performance ”