CORPORATE GOVERNANCE

1. INTRODUCTION TO CORPORATE
GOVERNANCE
PART - III

2. PRINCIPLES OF CORPORATE
GOVERNANCE
PRINCIPLE OF ACCOUNTABILITY
PRINCIPLE OF FAIRNESS
PRINCIPLE OF EQUITY
PRINCIPLE OF TRANSPERANCY
FIDUCIARY PRINCIPLE
PRINCIPLE OF INDEPENDENCE
PRINCIPLE OF CONFIDENTIALITY
PRINCIPLE OF DISCIPLINE
PRINCIPLE OF RESPONSIBILITY
PRINCIPLE OF SOCIAL
RESPONSIBILITY

3. PRINCIPLE OF ACCOUNTABILITY
Corporate accountability refers to the obligation and responsibility to
give an explanation or reason for the company’s actions and conduct.
Management is accountable to board
Board is accountable to share holders
Good corporate governance ensures the stake holders know company’s
affairs.
The board should communicate with all stake holders at regular interval
fair and understandable assessment of how the company is achieving its
business purpose

4. PRINCIPLE OF FAIRNESS
TELLS ABOUT LACK OF BIAS
SHOULD ENSURE FAIR TREATMENT TO ALL STAKE HOLDERS
ALL SHAREHOLDERS SHOULD RECEIVE EQUAL CONSIDERATION
THERE SHOULD ALSO BE FAIRNESS IN THE TREATMENTS OF ALL
THE STAKEHOLDERS

5. PRINCIPLE OF EQUITY
SHOULD PROTECT SHAREHOLDERS’ RIGHTS AND ENSURE THE
EQUITABLE TREATMENT OF ALL SHAREHOLDERS, INCLUDING
MINORUTY AND FOREIGN SHAREHOLDERS
EQUITY INVESTORS CAN ENJOY CERTAIN RIGHTS
LIABILITY IS LIMITED
ENTITLED TO PARTICIPATE IN THE PROFITS OF THE CORPORATION
RIGHT TO INFORMATION ABOUT THE CORPORATION
PARTICIPATION IN GENERAL MEETINGS

6. PRINCIPLE OF TRANSPERANCY
TIMELY AND ACCURATE DISCLOSURE OF INFORMATION BY A
CORPORATE COMPANY ON ALL MATTERS REGARDING CORPORATION
LIKE FINANCIAL SITUATION, PERFORMANCE OWNERSHIP……
STAKEHOLDERS SHOULD BE INFORMED ABOUT COMPANY ACTIVITIES
AND FUTURE CONCERNS
DISCLOSE ALL MATERIAL FACTS WHETHER IT IS FINANCIAL OR NON
FINANCIAL
TRANSPERANCY ENSURES CONFIDENCE AMONG STAKEHOLDERS
ABOUT DECISION MAKING

7. FIDUCIARY PRINCIPLE
BOARD OF DIRECTORS ARE GIVEN THE AUTHORITY TO ACT ON BEHALF OF THE
COMPANY
BOARD HAS THE FULL RESPONSIBILITY FOR THE POWERS THAT IT IS GIVEN
AND AUTHORITY THAT IT EXERCISE
BOARDS ARE RESPONSIBLE TO OVERSEEING THE MANAGEMENT, COMPANY
AFFAIRS, APPOINTING CHIEF EXECUTIVE.
ACT IN THE BEST INTERESTS OF THE COMPANY
BOARD SHOULD APPLY HIGH ETHICAL CODES
MUST PROTECT THE INTEREST OF THE STAKEHOLDERS OF CORPORATE

8. PRINCIPLE OF INDEPENDENCE
CORPORATE GOVERNANCE REQUIRES INDEPENDENCE ON THE
PART OF THE TOP MANAGEMENT
BOARD MUST BE STRONG NON PARTISAN BODY SO THEY CAN
MAKE ALL DECISIONS REGARDING COMPANY AFFAIRS
THIS MECHANISMS HAVE BEEN PUT IN TO PLACE TO MINIMIZE
OR AVOID POTENTIAL CONFLICTS OF INTERESTTHAT MAY EXIST,
SUCH AS DOMINANCE BY A STRONG CHIEF EXECUTIVE OR LARGE
SHARE OWNER

9. PRINCIPLE OF CONFIDENTIALITY
GOOD CORPORATE GOVERNANCE REQUIRES THAT THE
DISCUSSIONS BETWEEN THE MANAGEMENT AND SUPERVISORY
BODY BE OPEN AS MUST BE INTERNAL DELIBRATIONS OF THESE
REPRESENTATIVE BODIES.
ALL THE MEMBERS IN THE CORPORATE SHOULD MAKE SURE
THAT CONFIDENTIALITY OBLIGATION MAINTAINED IN THE
CORPORATE

10. PRINCIPLE OF DISCIPLINE
CORPORATE DISCIPLINE IS A COMMITMENT BY COMPANIES
MANAGEMENT TO COMPLY THE RULES AND REGULATIONS THAT
IS UNIVERSALY RECOGNIZED AND ACCEPTED
AT SENIOR MANAGEMENT LEVEL, THERE SHOULD BE A
COMMITMENT AND AWARENESS TO UNDERLYING PRINCIPLES

11. PRINCIPLE OF SOCIAL
RESPONSIBLITY
A WELL MANAGED COMPANY WILL BE AWARE OF AND RESPOND
TO SOCIAL ISSUES PLACING HIGHER PRIORITY ON ETHICAL
STANDARDS
NON DISCRIMINATORY
 NON EXPLOITATIVE
RESPONSIBLE WITH ENVIRONMENTAL AND HUMAN RIGHTS
ISSUES

12. PRINCIPLE OF RESPONSIBLITY
ALLOW THE ORGANISATION TO TAKE THE CORRECTIIVE ACTION
PENALISING THE MISMANAGEMENT
ACCOUNTABILITY OF THE BOARD TO THE SHAREHOLDERS
RESPONSIBILITY PRINCIPLE HELPS TO LEAD THE COMPANY IN
RIGHT DIRECTION

13. BIG CORPORATE SCANDALS
ENRON SCANDAL
LEHMAN BROTHERS
WORLDCOM
TYCO INTERNATIONAL
AMERICAN INTERNATIONAL GROUPS
SATYAM COMPUTERS SERVICES

14. CONCLUSION
CORPORATE: DEFINITION, FEATURES
CORPORATE GOVERNANCE: EVOLUTION, CORPORATE
GOVERNANCE IN INDIA, FEATURES, OBJECTIVES, NEED,
BENEFITS, MAJOR STAKEHOLDERS
COMMUNICATION: TYPES, COMMUNICATION MECHANISM
PRINCIPLES OF CORPORATE GOVERNANCE
BIG CORPORATE SCANDALS