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Corporate Governance
Concept  <ul><li>Narrowly as the relationship of a company to its shareholders or broadly as its relationship to Society <...
History & Need <ul><li>Origin – 1990 – Adrian Cadbury - UK </li></ul><ul><li>Shares owned by institutions managing pension...
CG In India <ul><li>Historically large trading families operating – Birlas, Tatas etc. </li></ul><ul><li>Post Independence...
Corporate Structure in India <ul><li>Private Sector </li></ul><ul><li>Promoter Director </li></ul><ul><li>Professional/Ind...
Corporate Structure in India <ul><li>Public Sector </li></ul><ul><li>Functional Directors </li></ul><ul><li>Government Dir...
Professionalising Corporate Governance <ul><li>Management and Control needs to be separated. Management (Initiation of pro...
Professionalising Corporate Governance <ul><li>Improve Accounting and Reporting Practices </li></ul><ul><li>Regular meetin...
A few pointers to Good Corporate Governance <ul><li>Effective Leadership and Direction </li></ul><ul><li>Good Management E...
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C G Intro

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C G Intro

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

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