Overview of Corporate Governance Dr. Elijah Ezendu FIMC, FCIM, FIIAN, FBDI, FAAFM, FAAPM, FCCM, MIMIS, MITD, ACIArb, ACIPM, PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CCIP, CMC

Learning Objectives At the end of this programme, participants should be able to do the following: Identify the basis of corporate governance Describe the importance of corporate governance in a firm Distinguish corporate governance from corporate management Explain the role of OECD in development of corporate governance

At the end of this programme, participants should be able to do the following:

Identify the basis of corporate governance

Describe the importance of corporate governance in a firm

Distinguish corporate governance from corporate management

Explain the role of OECD in development of corporate governance

Corporate governance is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interest of other stakeholders. Source: Report on Corporate Governance, Malaysia

Corporate governance is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interest of other stakeholders.

Source: Report on Corporate Governance, Malaysia

Corporate Governance refers to the manner in which the power of a corporation is exercised in the stewardship of the corporation’s total portfolio of assets and resources with the objective of maintaining and increasing shareholder value and satisfaction of other stakeholders in the context of its corporate mission. It is concerned with creating a balance between economic and social goals and between individual and communal goals while encouraging efficient use of resources, accountability in the use of power and stewardship and as far as possible to align the interests of individuals, corporations and society. Source: Private Sector Corporate Governance Trust, Kenya

Corporate Governance refers to the manner in which the power of a corporation is exercised in the stewardship of the corporation’s total portfolio of assets and resources with the objective of maintaining and increasing shareholder value and satisfaction of other stakeholders in the context of its corporate mission. It is concerned with creating a balance between economic and social goals and between individual and communal goals while encouraging efficient use of resources, accountability in the use of power and stewardship and as far as possible to align the interests of individuals, corporations and society.

Source: Private Sector Corporate Governance Trust, Kenya

“ Good governance is not simply about corporate excellence. It is the key to economic and social transformation. The corporation of today are no longer sheer economic entities. These are the engines of economic and social transformation.” - Dr Madhav Mehra, President of World Council For Corporate Governance

“ Good governance is not simply about corporate excellence. It is the key to economic and social transformation. The corporation of today are no longer sheer economic entities. These are the engines of economic and social transformation.”

- Dr Madhav Mehra, President of World Council For Corporate Governance

If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere. If investors are not confident with the level of disclosure, capital will flow elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere. All enterprises in that country – regardless of how steadfast a particular company’s practices may be – suffer the consequences. Source: Arthur Levitt, Former Chair of US Securities and Exchange Commission The Importance of Good Governance

If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere. If investors are not confident with the level of disclosure, capital will flow elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere. All enterprises in that country – regardless of how steadfast a particular company’s practices may be – suffer the consequences.

Source: Arthur Levitt, Former Chair of US Securities and Exchange Commission

Corporate Governance of an Organisation

Effective corporate governance requires a clear understanding of the respective roles of the board and of senior management and their relationships with others in the corporate structure. The relationships of the board and management with stockholders should be characterized by candor; their relationships with employees should be characterized by fairness; their relationships with the communities in which they operate should be characterized by good citizenship; and their relationships with government should be characterized by a commitment to compliance. Source: The Business Roundtable

Effective corporate governance requires a clear understanding of the respective roles of the board and of senior management and their relationships with others in the corporate structure. The relationships of the board and management with stockholders should be characterized by candor; their relationships with employees should be characterized by fairness; their relationships with the communities in which they operate should be characterized by good citizenship; and their relationships with government should be characterized by a commitment to compliance.

Source: The Business Roundtable

Accountability Fundamental Pillars of Corporate Governance Transparency Responsibility Fairness Source: Malaysian Institute of Corporate Governance Corporate Governance

Accountability Clarifying governance roles & responsibilities, and supporting voluntary efforts to ensure the alignment of managerial and shareholder interests and monitoring by the board of directors capable of objectivity and sound judgment. Transparency Requiring timely disclosure of adequate information concerning corporate financial performance

Accountability

Clarifying governance roles & responsibilities, and supporting voluntary efforts to ensure the alignment of managerial and shareholder interests and monitoring by the board of directors capable of objectivity and sound judgment.

Transparency

Requiring timely disclosure of adequate information concerning corporate financial performance

Responsibility Ensuring that corporations comply with relevant laws and regulations that reflect the society’s values Fairness Ensuring the protection of shareholders’ rights and the enforceability of contracts with service/resource providers

Responsibility

Ensuring that corporations comply with relevant laws and regulations that reflect the society’s values

Fairness

Ensuring the protection of shareholders’ rights and the enforceability of contracts with service/resource providers

International Initiatives on Corporate Governance International Corporate Governance Network founded by institutional investors in Europe and North America Global Corporate Governance Forum founded by OECD and World Bank Commonwealth Association for Corporate Governance founded by Commonwealth Heads of Government

International Corporate Governance Network founded by institutional investors in Europe and North America

Global Corporate Governance Forum founded by OECD and World Bank

Commonwealth Association for Corporate Governance founded by Commonwealth Heads of Government

International Scenario Source: Rajkumar Adukia, Corporate Governance & Audit Committee Year Name of Committee/Body Areas/Aspects Covered 1992 Sir Adrian Cadbury Committee, UK Financial Aspects of Corporate Governance 1994 Mervyn E . King’s Committee , South Africa Corporate Governance 1995 Greenbury Committee , UK Directors’ Remuneration 1998 Hampel Committee, UK Combine Code of Best Practices 1999 Blue Ribbon Committee, US Improving the Effectiveness of Corporate Audit Committees 1999 OECD Principles of Corporate Governance 1999 CACG Principles for Corporate Governance in Commonwealth 2003 Derek Higgs Committee, UK Review of role of effectiveness of Non-executive Directors 2003 ASX Corporate Governance Council, Australia Principles of Good Corporate Governance and Best Practice Recommendations

OECD The Organisation for Economic Cooperation and Development started operations in 1961to convene governments of countries focused on democracy and the market economy to support sustainable economic growth, boost employment, raise living standards, maintain financial stability, assist in enhancing economic development, boost growth in world trade, share expertise and exchange views.

The Organisation for Economic Cooperation and Development started operations in 1961to convene governments of countries focused on democracy and the market economy to support sustainable economic growth, boost employment, raise living standards, maintain financial stability, assist in enhancing economic development, boost growth in world trade, share expertise and exchange views.

OECD Principles of Corporate Governance Endorsement of OECD Principles of Corporate Governance by OECD Ministers as an international benchmark for policy makers, investors, corporations and other stakeholders worldwide. Revised Principles of Corporate Governance. OECD Steering Group on Corporate Governance issued the Methodology for Assessing Implementation of OECD Principles of Corporate Governance.

OECD Principles of corporate governance serve as framework for Country Corporate Governance Assessment, which is part of Reports on the Observance of Standards and Codes (ROSC) coordinated by World Bank and International Monetary Fund

OECD Principles of corporate governance serve as framework for Country Corporate Governance Assessment, which is part of Reports on the Observance of Standards and Codes (ROSC) coordinated by World Bank and International Monetary Fund

Reports on the Observance of Standards and Codes ROSCs summarize the extent to which countries observe certain internationally recognized standards and codes. The IMF has recognized 12 areas and associated standards as useful for the operational work of the Fund and the World Bank. These comprise accounting; auditing; anti-money laundering and countering the financing of terrorism; banking supervision; corporate governance; data dissemination; fiscal transparency; insolvency and creditor rights; insurance supervision; monetary and financial policy transparency; payments systems; and securities regulation. Source: International Monetary Fund

ROSCs summarize the extent to which countries observe certain internationally recognized standards and codes. The IMF has recognized 12 areas and associated standards as useful for the operational work of the Fund and the World Bank. These comprise accounting; auditing; anti-money laundering and countering the financing of terrorism; banking supervision; corporate governance; data dissemination; fiscal transparency; insolvency and creditor rights; insurance supervision; monetary and financial policy transparency; payments systems; and securities regulation.

CORPORATE GOVERNANCE CORPORATE MANAGEMENT External Focus Internal Focus Governance assumes an open system Management assumes a closed system Strategy-orientated Task-orientated Concerned with where the company is going Concerned with getting the company there

“ Corporate governance is… holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society. The incentive to corporations is to achieve their corporate aims and to attract investment. The incentive for states is to strengthen their economics and discourage fraud and mismanagement.” - Sir Adrian Cadbury, Corporate Governance: A Framework for Implementation

“ Corporate governance is… holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society. The incentive to corporations is to achieve their corporate aims and to attract investment. The incentive for states is to strengthen their economics and discourage fraud and mismanagement.”

- Sir Adrian Cadbury, Corporate Governance: A Framework for Implementation

Corporate Governance Investors are Willing to Pay More For a Company With Good Board Governance Practices Source: World Bank Institute 83 81 89 Companies are willing to pay 18 % to 28% more for better governance.

Dr. Elijah Ezendu is a multidisciplinary professional whose business experience mounts through diverse fields. He is a Certified Management Consultant, licensed by International Council of Management Consulting Institutes which has a Special Consultative Status in United Nations Economic and Social Council. As a result of his strides in management consulting, he received Merit Award for Excellence in Consulting. He is concurrently Senior Partner, Shevach Consulting; Director of Strategy and Performance, Fortuna; Lead Assessor and Member of Governing Council, Institute of Management Consultants; Director of Training, International Council of Business Development Professionals; Member of Marketing Committee, International Council of Management Consulting Institutes; Honorary Global Advisor, International Project Management Commission; and Programme Coordinator (Nigeria), Regent Business School, South Africa. He holds a doctoral degree in Management from St. Clements University, British West Indies. He is a Chartered Manager certified by Canadian Institute of Management, Canada and holds numerous professional qualifications including Master Project Manager; Project Manager E-Business; Fellow, Institute of Management Consultants; Fellow, Certified Institute of Cost Management; Fellow, Institute of Business Development; Fellow, American Academy of Financial Management; Fellow, Institute of Internal Auditors; Member, Nigerian Institute of Training and Development; Member, Institute of Analytics Professionals; Associate, Chartered Institute of Personnel Management of Nigeria; Associate, Chartered Institute of Arbitrators (Nigeria). He is a Certified Business Development Analyst and Competitive Intelligence Professional. Additionally, he is an information technology management professional certified by Institute for the Management of Information Systems, UK along with Microsoft Corporation, USA and stands as a Member of International Association of Software Architects. He is an outstanding motivational speaker with a knack for recalibration of positive influence; and a world-class consultant, who has functioned as Speaker/Facilitator at myriad programmes of professional institutes, international development organisations, private and public firms including extra-governmental agencies and institutions. He is a prolific writer and author who had served as Editor-in-Chief, Cost Management Journal; Part-Time Lecturer & External Examiner (MBA Programme), Ladoke Akintola University of Technology; Director of MBA Programme (Nigerian Outreach), Management Institute of Canada; Chief Operating Officer, Rohan Marine; Second Vice President and Member of Governing Council, Certified Institute of Cost Management; Director of Programmes and Member of Governing Council, The Institute of Business Development; Director, Refined Shipping; and Examiner to various Professional Institutes.

Dr. Elijah Ezendu is a multidisciplinary professional whose business experience mounts through diverse fields. He is a Certified Management Consultant, licensed by International Council of Management Consulting Institutes which has a Special Consultative Status in United Nations Economic and Social Council. As a result of his strides in management consulting, he received Merit Award for Excellence in Consulting. He is concurrently Senior Partner, Shevach Consulting; Director of Strategy and Performance, Fortuna; Lead Assessor and Member of Governing Council, Institute of Management Consultants; Director of Training, International Council of Business Development Professionals; Member of Marketing Committee, International Council of Management Consulting Institutes; Honorary Global Advisor, International Project Management Commission; and Programme Coordinator (Nigeria), Regent Business School, South Africa. He holds a doctoral degree in Management from St. Clements University, British West Indies. He is a Chartered Manager certified by Canadian Institute of Management, Canada and holds numerous professional qualifications including Master Project Manager; Project Manager E-Business; Fellow, Institute of Management Consultants; Fellow, Certified Institute of Cost Management; Fellow, Institute of Business Development; Fellow, American Academy of Financial Management; Fellow, Institute of Internal Auditors; Member, Nigerian Institute of Training and Development; Member, Institute of Analytics Professionals; Associate, Chartered Institute of Personnel Management of Nigeria; Associate, Chartered Institute of Arbitrators (Nigeria). He is a Certified Business Development Analyst and Competitive Intelligence Professional. Additionally, he is an information technology management professional certified by Institute for the Management of Information Systems, UK along with Microsoft Corporation, USA and stands as a Member of International Association of Software Architects. He is an outstanding motivational speaker with a knack for recalibration of positive influence; and a world-class consultant, who has functioned as Speaker/Facilitator at myriad programmes of professional institutes, international development organisations, private and public firms including extra-governmental agencies and institutions. He is a prolific writer and author who had served as Editor-in-Chief, Cost Management Journal; Part-Time Lecturer & External Examiner (MBA Programme), Ladoke Akintola University of Technology; Director of MBA Programme (Nigerian Outreach), Management Institute of Canada; Chief Operating Officer, Rohan Marine; Second Vice President and Member of Governing Council, Certified Institute of Cost Management; Director of Programmes and Member of Governing Council, The Institute of Business Development; Director, Refined Shipping; and Examiner to various Professional Institutes.

Thank You Dr. Elijah Ezendu elezendu@yahoo.com, 234 8033024596, 234 8058835237