Corporategovernance

1,429 views

Published on

Published in: Business, Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,429
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • A very good Evening to all of you Distinguished Chief Guest Shri L K Advani, Hon’ble Deputy Prime Minister of India, Justice Shri M N Venkatachalliah, Shri M M K Sardana, Shri G N Bajpai, Shri S Gangopadhyay, Shri N K Jain, Members of the Jury, My Fellow Council Members, Senior Government officials, Corporate Executives, Invitees, Members of Profession, Students, Ladies and Gentlemen.
  • Ladies and Gentlemen Corporate Governance rests with the Vision and Perception of the Corporate Leadership
  • and The ICSI has adopted a Vision for Corporate Governance itself
  • The ICSI Parivar follows principles based on ethics and humanity Fairness to all stakeholders Mutual Trust, Transparency and Togetherness Unrestricted Communication and Continuous Feedback Sharing Knowledge, Success Stories and Experience Sharing Happiness and Concerns Helping Each Other – Round the Clock
  • In fact, these basic principles are the foundation of Best Governed Organisations, irrespective of their form and size
  • Corporate Governance is not a buzzword, there are so many advantages of applying good corporate governance practices
  • The first advantage is GROWTH Growing Revenues Growing Profits Growing Market Value
  • Companies get Widespread Goodwill and Brand Reputation, resulting into Widening Customer Base Ready Market for New Products Access to Global Markets, and Better Access to Human Capital
  • and Enhanced Trust and Confidence of all Stakeholders INVESTORS EMPLOYEES CUSTOMERS SUPPLIERS GOVERNMENT AND REGULATORS, and SOCIETY at large
  • Leading to…
  • SUSTAINABLE DEVELOPMENT
  • Ladies and Gentlemen Commitment to well-being and progress of all stakeholders is our age old mantra
  • Taittariya Upanishad, which has for ages strengthened our centres of education, contains invaluable advice to students passing out from an institute of learning - Satyam Vada Dharmam Chara
  • “ Forever speak the truth and follow the dharma”
  • Truthful disclosure of State of Affairs i.e. transparency operations and transactions.
  • In the Karna Parva of the Mahabharata Chapter 69 says: Dharma is for the stability of society, the maintenance of social order and the general well-being and progress of humankind i.e. the Overall Governance
  • In Ayodhya Kand of Ramayana, Lord Rama explains the concept of Governance as “ to provide the maximum happiness for the maximum number of people for the maximum period, based as it is on the principles of Dharma –righteousness and moral values.”
  • Mahatma Gnadhi said “The Customer is King”
  • This is the soul behind modern Marketing Management
  • We have been worshipping 33 Crore Gods signifying various species, plants, cosmic elements, … or 33 Crore Components of Nature.
  • We Care for Panchtatvas - Prithvi, Jal, Vaayu, Akaash and Agni that make a human being
  • This is our approach to Environment Protection.
  • The four essential principles of Mahatma Gandhi's philosophy - Truth, Ahimsa, Trusteeship and Constructive Action are widely quoted the worldover. Gandhi said we don't own the talent but we are appointed  "Trustees" by God and so we must use the talent to help others, less fortunate or talented than us. The Board of Director being Trustees should work with highest level of integrity and independence and strive for growth of all stakeholders.
  • Similarly, Corporates are also expected to use their Capacity, Knowledge and Resources towards maximisation stakeholders’ value and well-being and progress of humankind (i.e. Dharma) through Transparency, accountability and truthful disclosure of state of affairs (i.e.Truth)
  • This is our own age old mantra of Good Governance.
  • Ladies and Gentlemen Companies that have won ICSI National Award for Excellence in Corporate Governance have
  • Consistently earned high returns, increased their net worth and enhanced their shareholders wealth
  • Invested significantly in proactive research and development
  • Developed people into ‘achievers’ than just ‘performers’
  • Dealt ethically with customers, government and business partners
  • Maintained and updated their professional management culture, system and processes
  • ..and accomplished
  • Growing Investors Winning Employees Delighted Customers Trusted Suppliers Satisfied Government And Regulators Happy Society That is Excellence, which everyone aspires for and that leads to National Growth
  • Thank You
  • Corporategovernance

    1. 1. Corporate Governance Theory & Practice07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 1
    2. 2. Corporate Governance rests with the Vision and Perception of the Leadership07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 2
    3. 3. and A Leader need to adopt a Vision for Corporate Governance07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 3
    4. 4. Corporate Governance Framework Wealth Creation Wealth Management Wealth Sharing ? Distribu- tion Happiness and Output – Input Prosperity of all = Wealth Created Stakeholders SUPPLIERS Adequate Returns Reinvestment HUMAN ASSETS Enhanced Capabilities Adequate Remuneration CUSTOMERS Sustainability Affordable Prices PUBLIC Research and Payment of Taxes and Partnership in National Development Development Projects HR Development Infrastructure Risk Management Best Management Practices are Vital Here Law and Ethics are Vital Here07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 4
    5. 5. Stakeholders in Value Chain ROLE OF STAKEHOLDERS Supply Funds, Value Addition and Give Opportunity to Co. Materials and Services Management of to Satisfy their Needs Resources SUPPLIERS HUMAN CUSTOMERS RESOURCE Adequate Returns for Adequate Salary and Best Quality Products Funds, Material and Security for leading a and Customer Care at Services Supplied Happy Life Minimum Prices EXPECTATIONS OF STAKEHOLDERS Potential Suppliers, Human Biological, Economic and Resources and Customers PUBLIC Cultural Environment PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 5
    6. 6. Principles of Corporate Excellence Fairness to all stakeholders Mutual Trust, Transparency and Togetherness Unrestricted Communication and Continuous Feedback Sharing Knowledge, Success Stories and Experience Sharing Happiness and Concerns Helping Each Other – Round the Clock07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 6
    7. 7. Infact, these principles are the foundation of Best Governed Organisations irrespective of their form and size07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 7
    8. 8. Advantages of applying Best Corporate Governance Practices07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 8
    9. 9. Growing Growing Revenues Profits Growth Growing Market Value07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 9
    10. 10. Widening Ready Market for Customer Base New Products Widespread Goodwill and Brand Reputation Access to Global Better Access to Markets Human Capital07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 10
    11. 11. CUSTOMERS INVESTORS EMPLOYEES Enhanced Trust and Confidence of all Stakeholders GOVERNMENT AND REGULATORS SOCIETY SUPPLIERS07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 11
    12. 12. Leading to…07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 12
    13. 13. Environment SUSTAINABLE DEVELOPMENT Business Society Civil Society07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 13
    14. 14. Commitment to well-being and progress of all stakeholders is our age old mantra07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 14
    15. 15. Satyam Vada Dharmam Chara - Taittariya Upanishad07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 15
    16. 16. “Forever speak the truth and follow the dharma”07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 16
    17. 17. Truth : Disclosure of Actual State of Affairs (Transparency in operations and transactions)07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 17
    18. 18. Dharma : “Dharma is for the stability of society, the maintenance of social order and the general well-being and progress of humankind.” - Karna Parva of the Mahabharata. Verse-58 in Chapter 6907/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 18
    19. 19. Governance Concept in ‘Ramayana’ To provide “the maximum happiness for the maximum number of people for the maximum period, based on the principles of Dharma – righteousness and moral values.” - Ayodhya Kand07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 19
    20. 20. “The Customer is King” - Mahatma Gandhi07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 20
    21. 21. This is the soul behind modern Marketing Management07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 21
    22. 22. Worshipping 33 Crore Godheads signifying various species, plants, cosmic elements, …07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 22
    23. 23. Care for Panchtatvas - Prithvi, Jal, Vaayu, Akaash and Agni that make a human being07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 23
    24. 24. This is our approach to Environment Protection07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 24
    25. 25. The four essential principles of Mahatma Gandhis philosophy Truth, Ahimsa, Trusteeship and Constructive Action07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 25
    26. 26. Corporates are also expected to use their Capacity, Knowledge and Resources TOWARDS Dharma Maximisation of stakeholders’ value and well- being and progress of humankind THROUGH Truth Transparency, accountability and truthful disclosure of state of affairs07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 26
    27. 27. This is our own age old mantra of Good Governance07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 27
    28. 28. Corporate Governance Theory & Practice07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 28
    29. 29. CG – Theory & Practice07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 29
    30. 30. CG In practice - Board Structure • No procedure for selection of directors resulting into appointment of relatives. • No requirements for minimum qualification of directors • No requirement of training and development of skills of directors. • Remuneration vs. Responsibility of independent Directors. • Mockery of independency by appointment of interdependent directors.07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 30
    31. 31. CG – In spirit • Selection of directors from a pool of knowledgeable and respected persons. • Professional attitude and capability of independent directors of taking commercial decisions. • Disclosure of timely and sufficient information to the directors to enable them to participate effectively. • Independent directors to have an enquiring mind but not just a questioning attitude. • Development of skills of directors through training.07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 31
    32. 32. Examples from History07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 32
    33. 33. History is Witness Outstanding Performance, DS Higher Profits, IU Expanded Market Reach and the like SC FAILS AE to protect a company SS which has put good governance & ethics TS at the back burner…. E R07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 33
    34. 34. History has also repeated itself The SATYAM Fiasco A mockery of Corporate Governance07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 34
    35. 35. The Satyam Fiasco • Out casting of Minority Shareholders • Diversion of property from Company where the promoter has merely 8.5% stake to a company with 100% stake. • Attempt to turn company sitting on cash into a debt-ridden company. • Fudging of accounts of thousands of Crores.07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 35
    36. 36. Secret behind building foundations ..…Only the culture of strict adherence to good compliance can keep a company ahead on sustainable basis , bring in larger profits…07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 36
    37. 37. CORPORATE GOVERNANCE AT07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 37
    38. 38. Company Philosophy on Corporate Governance Corporate Governance standards should go beyond the law. Maintain high degree of disclosure levels. When in doubt, disclose. Make a clear distinction between personal conveniences & corporate resources. Management is the trustee of the shareholders’ capital and not the owner.07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 38
    39. 39. Board Meetings 1. Scheduling of dates of Board Meetings 2. Drafting of Agenda by Chairman of the Board & Company Secretary in consultation with Lead Independent Director 3. Circulation to all Directors 4. Recommendations for inclusion of items 5. Inclusion of items in the agenda 6. Meetings of Committees 7. Formal Board Meeting with video conferencing facilities to all directors07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 39
    40. 40. Committees Management Audit Committee – 6 Members – All Independent Directors (Cl. 49 requires minimum 3 directors) Compensation Committee – 4 Members – All Independent Directors (Non-mandatory under Cl 49) Nomination Committee – 5 Members – All Independent Directors (Not required under Cl 49) Investors’ Grievance Committee – 4 Members – All Independent Directors (Cl 49 requires only the Chairman to be independent) – 0 Pending Complaint Investment Committee – 7 Members – All Executive Directors (Not required under CL 49) Each committee has its detailed charter.07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 40
    41. 41. Compliance with Non-mandatory requirements • Maximum tenure of independent directors is nine years. • Dissemination of regular information to investors through e-mail, telephone, face-to-face meetings, road shows etc. • Presentations are made by executive directors to familiarize the new non-executive directors with the Company’s operations. • Evaluation of non-executive directors through a peer-evaluation process. • Whistle blower policy providing direct access of employees to Chairperson of Audit Committee.07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 41
    42. 42. ICRA – CGR 1 CRISIL – And CRISIL GVC That’s what makes Level 1 Infosys A value driven organization07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 42
    43. 43. Present Status of CG Practices – The CRISIL Experience Practice Status Equitable Treatment of Moderate Shareholders Transparency and Disclosure strong Relatively Composition of Board Scope for improvement Functioning of Board Moderate07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 43
    44. 44. Value Addition - The CRISIL Experience Stakeholders Status Share Holders High Debt Holders Highest Employees Moderate Customers High Suppliers Scope for improvement Society Scope for improvement07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 44
    45. 45. Companies that have followed these principles of Corporate Governance have07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 45
    46. 46. Consistently earned high returns, increased their net worth and enhanced their shareholders wealth07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 46
    47. 47. Invested significantly in proactive research and development07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 47
    48. 48. Developed people into ‘achievers’ than just ‘performers’07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 48
    49. 49. Dealt ethically with customers, government and business partners07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 49
    50. 50. Maintained and updated their professional management culture, system and processes07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 50
    51. 51. ..and accomplished07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 51
    52. 52. WINNING GROWING EMPLOYEES INVESTORS HAPPY DELIGHTED SOCIETY CUSTOMERS SATISFIED TRUSTED GOVERNMENT AND SUPPLIERS REGULATORS07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 52
    53. 53. 07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 53

    ×