Submitted to Prepare by.
Anupama Goswami Gediya Rakesh
K.K Parekh institute of management studies-Amreli
Corporate Governance is concerned with holding
the balance between economic and social goals
and between individual and communal goals.
The corporate 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
- Sir Adrian Cadbury
◦ In December 1995, CII set up a task force to design a voluntary code of
◦ The final draft of this code was widely circulated in 1997
◦ In April 1998, the code was released. It was called Desirable Corporate
Governance: A Code
◦ Between 1998 and 2000, over 25 leading companies voluntarily followed
the code: Bajaj Auto, Hindalco, Infosys, Dr. Reddy’s Laboratories,
Nicholas Piramal, Bharat Forge, BSES, HDFC, ICICI and many others
Following CII and SEBI, the Department of Company Affairs
(DCA) modified the Companies Act, 1956 to incorporate
specific corporate governance provisions regarding
independent directors and audit committees
In 2001-02, certain accounting standards were modified to
further improve financial disclosures. These were:
◦ Disclosure of related party transactions
◦ Disclosure of segment income: revenues, profits and capital
◦ Deferred tax liabilities or assets
◦ Consolidation of accounts
Initiatives are being taken to (i) account for ESOPs, (ii) further
increase disclosures, and (iii) put in place systems that can
further strengthen auditors’ independence
To conflict of interest particular those b/w manager
To assets of the company are used efficiently and
in the best interest of its investors and other
To create a trust in the corporate and in its
To exercise effective control on corporate affairs
by the board at all times.
To promote business development.
To improve the efficiency of the capital markets.
To enhance the effectiveness in the service of the
To promote a healthy environment for the long
Corporate Governance Committee:
Every publicly owned corporation should have a
committee that addresses corporate governance
A corporate governance committee
performs the core function of
recommending nominees to the board. The
committee also recommends directors for
appointment to committees of the board.
Quality of Corporate Governance and Firm
corporate governance creates a framework of goals
and policies to guide an organization’s progress and
forms a foundation for assessing board and
There is strong evidence to suggest that corporate
performance and to an extent economic stability, is
directly impacted by the quality of corporate
Good Board practices
Protect to Shareholder interest
Transparency and disclose
Integrity and ethical behaviour Promote the
trust of investors
Rights and equitable treatment of
Integrity and ethical behaviour
Internal control procedures and internal
Balance of power.
External corporate governance controls.
Corporate Governance and its impact on the
performance of a firm, the better corporate
governance leads to better corporate
Good governance means little expropriation of
corporate resources by managers or controlling
shareholders, which contributes to better
allocation of resources and better performance.
Corporate governance purposeful and strategic
direction and to manage the company.
Corporate governance ensures compliance with the
memorandum and Articles of Association of the
To act at all times, in the best interests of the
company, including shareholders, employees and
The need for corporate governance arises because of
the separation of management and ownership in the
modern corporation. In practice, the interest of those
who have effective control over a firm can differ from
the interests of those who supply the firm with external
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