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Cg Intro
 

Cg Intro

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    Cg Intro Cg Intro Presentation Transcript

    • Corporate Governance
    • Concept
      • Narrowly as the relationship of a company to its shareholders or broadly as its relationship to Society
      • Is about promoting corporate fairness, transparency and accountability.
      • Is the system by which business corporations are directed and controlled.
      • Spells out the rights and responsibilities among different participants – the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs.
    • History & Need
      • Origin – 1990 – Adrian Cadbury - UK
      • Shares owned by institutions managing pension funds. Hence needy people will be affected if the companies were not managed well.
      • FDI could be attracted
      • Competitive pressures leading to increased frauds/ falsifying accounts
      • Privatization could lead to lowering of ethics
    • CG In India
      • Historically large trading families operating – Birlas, Tatas etc.
      • Post Independence, India went on a socialist path.
      • Licence Raj
      • From 1991 came a slow and steady phase of LPG (Liberalization, Privatization and Globalization)
      • LPG implied more emphasis on Corporate Governance.
    • Corporate Structure in India
      • Private Sector
      • Promoter Director
      • Professional/Independent Directors
      • Institutional Director
    • Corporate Structure in India
      • Public Sector
      • Functional Directors
      • Government Directors
      • Outside Directors
    • Professionalising Corporate Governance
      • Management and Control needs to be separated. Management (Initiation of proposals and their implementation) by CEO and his team. Control (Approvals and monitoring)by Board of Directors
      • Active role of institutional investors can provided the much needed improvement in corporate governance.
      • Role of non-executive directors to be increased.
      • Proper and timely information to the Board
      • Optimum Size of the Board – 10-12 members.
    • Professionalising Corporate Governance
      • Improve Accounting and Reporting Practices
      • Regular meetings of the Board – At least once every quarter
      • At least 50% of the Board should comprise non-executive directors and at least one third of the independent directors
      • Annual Report should have one section on Corporate Governance.
    • A few pointers to Good Corporate Governance
      • Effective Leadership and Direction
      • Good Management Environment
      • Sound Risk Management
      • Proper and timely monitoring systems
      • Accountability
    • Thank You