INTRODUCTION

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. The principal stakeholders are the shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large.

HISTORY
In the 19th century, state corporation laws enhanced the rights of corporate boards to govern without unanimous consent of shareholders in exchange for statutory benefits like appraisal rights, to make corporate governance more efficient in U.S. The confederation of INDIAN industries was the first to appoint a committee under chairmanship of Mr.Rahul Bajaj in 1998. It was followed by 4 national level committee.

DEFINITION
Corporate governance is the set of processes, customs, policies and laws affecting the way in which a corporation is directed, administered or controlled Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization.

PARTIES TO CORPORATE GOVERNANCE

PRINCIPLES
Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.

CORPORATE GOVERNANCE INCLUDE:

y

Rights and equitable treatment of shareholders: Interests of other stakeholders: Role and responsibilities of the board: Integrity and ethical behavior: Disclosure and transparency:

MECHANISMS AND CONTROLS

1. INTERNAL CORPORATE GOVERNANCE CONTROLS. 2. EXTERNAL CORPORATE GOVERNANCE CONTROLS.

INTERNAL CORPORATE GOVERNANCE CONTROLS

Monitoring by the board of directors y Internal control procedures and internal auditors y Remuneration y Balance of power
y

EXTERNAL CORPORATE GOVERNANCE CONTROLS

y y y y y y y

Competition Debt covenants Demand for and assessment of performance information (especially financial statements) Government regulations Managerial labour market Media pressure Takeovers

ROLE OF THE ACCOUNTANT

Financial reporting is a crucial element necessary for the corporate governance system to function effectively. Accountants and auditors are the primary providers of information to capital market participants.

CODES AND GUIDELINES

Corporate governance principles and codes have been developed in different countries and issued from stock exchanges, corporations, institutional investors, or associations (institutes) of directors and managers with the support of governments and international organizations. As a rule, compliance with these governance recommendations is not mandated by law, although the codes linked to stock exchange listing requirements may have a coercive effect.