C G Transparency


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C G Transparency

  1. 1. Corporate Governance -Principles & Disclosure
  2. 2. Principles of CG <ul><li>Equitable treatment to shareholders </li></ul><ul><li>Interests of other stakeholders to be kept in mind </li></ul><ul><li>The Board should be of high quality </li></ul><ul><li>Ethical and responsible decision making </li></ul><ul><li>Timely and balanced disclosures to investors </li></ul>
  3. 3. OECD (Organization for economic cooperation and development) Principles of CG <ul><li>Ensuring the basis for an effective CG framework </li></ul><ul><li>Rights and equitable treatment of shareholders </li></ul><ul><li>Role of Stakeholders in CG </li></ul><ul><li>Disclosure and Transparency </li></ul><ul><li>Responsibilities of the Board </li></ul>
  4. 4. Issues Related to CG <ul><li>Relationship between CG, Transparency and Financial disclosure </li></ul><ul><li>A need for good governance </li></ul><ul><li>Roles and Responsibilities of investors </li></ul><ul><li>Competency and Training </li></ul>
  5. 5. 4 P’s of CG <ul><li>People – Fair Treatment and just punishment </li></ul><ul><li>Purpose- Established, measurable,actionable and communicated. Vision-Mission and Strategy </li></ul><ul><li>Process – Management, compliances and innovation. </li></ul><ul><li>Performance – measured, analyzed communicated to achieve growth through efficiency </li></ul>
  6. 6. Clause 49 of Cos Act 1956 <ul><li>Management Discussion and analysis </li></ul><ul><li>Industry structure and developments </li></ul><ul><li>Segment wise and product wise performance </li></ul><ul><li>Market Price Data </li></ul><ul><li>Performance wrt indices like BSE 200 </li></ul><ul><li>Matters to be placed before the board </li></ul><ul><li>Annual operating plans and budgets </li></ul><ul><li>Forex exposure </li></ul><ul><li>Default in financial obligation </li></ul><ul><li>Report on Risk Management – SWOT analysis </li></ul>
  7. 7. Issue Price Disclosure (SEBI) <ul><li>Fixation and justification of issue price </li></ul><ul><li>Risk Factors and management perception </li></ul><ul><li>Industry analysis report </li></ul><ul><li>Installed capacity and utilization </li></ul><ul><li>Past Track record and projected financial analysis </li></ul><ul><li>Comparison of financial data with industry averages </li></ul><ul><li>Stock Market Data analysis </li></ul><ul><li>Significant financial ratios </li></ul><ul><li>Profitability ratios </li></ul><ul><li>Earnings Per Share (EPS) </li></ul><ul><li>Return on Net Worth </li></ul><ul><li>P/E Ratio </li></ul>
  8. 8. Disclosure & Transparency (OECD) <ul><li>Financial and Operating Results </li></ul><ul><li>Company objectives </li></ul><ul><li>Major share ownership and voting rights </li></ul><ul><li>Remuneration policy for Board members and key executives, including their qualifications, selection process and other company directorship and if they are independent. </li></ul><ul><li>Related party transactions </li></ul><ul><li>Foreseeable risk factors </li></ul><ul><li>Issues regarding employees </li></ul><ul><li>Governance structures and Policies – any code of CG and its implementation process </li></ul>
  9. 9. Disclosure & Transparency (OECD) <ul><li>Information – High quality standards of accounting and financial disclosure </li></ul><ul><li>Annual audit to be conducted by independent, competent, qualified auditors so as to provide assurance to the Board & stakeholders that the financial statements actually represent the financial position of the company </li></ul><ul><li>External auditors should be accountable to the shareholders and owe a duty to the company </li></ul><ul><li>Channels for disseminating information should provide for equal, timely and cost-efficient access to relevant information by users. </li></ul><ul><li>The CG framework should be complemented by an approach that allows advice and analysis by analysts, brokers, rating agencies and others, free from material conflicts of interest. </li></ul>
  10. 10. Independent Directors <ul><li>CII and Prime database maintain a large database of individuals who qualify to become independent directors </li></ul>
  11. 11. Role of the Board (OECD) <ul><li>Members to act on fully informed basis, in good faith, with due diligence and care and in the best interest of the company and the shareholders </li></ul><ul><li>The board should treat all shareholders fairly </li></ul><ul><li>The board should apply high ethical standards </li></ul>
  12. 12. Key functions of the Board <ul><li>Reviewing corporate strategy, action plans, risk policy, annual budgets, performance objectives, monitoring performance, overseeing major capital expenditures, acquisitions and divestitures </li></ul><ul><li>Monitoring the effectiveness of governance practices </li></ul><ul><li>Selecting, compensating, monitoring if required replacing key executives and oversee succession planning. </li></ul><ul><li>Aligning key executive and board remuneration with the long term interests of the co. and shareholders </li></ul>
  13. 13. Key functions of the Board <ul><li>Ensuring a formal and transparent board nomination and election process. </li></ul><ul><li>Monitoring and managing potential conflicts of interest of management, board, members and shareholders including misuse of corporate assets and abuse in related party transactions </li></ul><ul><li>Ensuring integrity of co’s accounting and financial reporting systems, including audit and ensuring compliance with the law and the relevant standards. </li></ul><ul><li>Overseeing the process of disclosure and communications </li></ul>
  14. 14. Thank You