This document summarizes the key points from a presentation on corporate governance. It defines corporate governance and discusses its importance, increasing demand, and the Birla Committee formed in 1999 to develop recommendations for corporate governance best practices in India. The summary highlights that corporate governance concerns balancing economic and social goals, ethics and accountability. It is important for multinational corporations due to their wide impact. The Birla Committee aimed to distinguish board and management responsibilities and emphasize shareholder rights.

2. A presentation on
Presented To:-
Prof. Tejal Shah
Presented By:-
Prajapati Haresh
MBA(F.S-2)

3. Point To be Covered
• Introduction
• Importance
• Demand
• Birla committee

4. Introduction
 Definition:-
“ Corporate Governance is concerned with holding the
balance between economics and social goals and
between individual and communal goals. The
corporate Governance framework is there to
encourage the efficient use of resources equally, for
accountability for the stewardship of those resources.
The aim is to align as nearly as possible the interests
of individual, corporation, and the socity ”

5. • Corporate Governance is also concerned with the ethics,
values, and moral of a company and its directors.
• The system by which companies are directed and
controlled; boards of directors are responsible for the
Governance of companies.
• Corporate Governance is the relationship among corporate
managers, directors and providers of equity, people, and
institution who save and invest their capital to earns &
returns.

6. Separation of ownership and MGMT.
Shareholders
Employees
Board
Management

7. Importance
• Many large corporations are multinational and/or
transnational in nature. This means corporation have impact
on citizens of several countries across the globe.
• If things go wrong, they will affect many countries, albeit
some more severely than others.
• Corporate Governance is needed to create a corporate
culture of consciousness, transparency and openness.

8. • It refers to a combination of laws, rules, regulations,
producers and voluntary practices to enable companies to
maximize shareholder’s long-term value.
• It should lead to increasing customer satisfaction,
shareholder value and wealth.
• With increasing government awareness, the focus is
shifted from economic to the social sphere and an
environment is being created to ensure greater transparency
and accountability.
• It is integral to the very existence of a company.

9. Demand
• Need for corporate governance arises due to separation of
management from the ownership.
• For a firm success, it needs to concentrate on both
economical and social aspect. It needs to be fair with
producers, shareholders, customers etc.
• The “corporate governance concept” dwells in India from
the Arthashastra time instead of CEO at that time there
were kings and subjects.
• Today, corporate and shareholders replace them but the
principles still remain same, unchanged i.e. good
governance

10. • 20th century witnessed the glossy of Indian Economy
due to liberalization, globalization, and privatization.
•Indian economy for the 1st time here was together with
world economy for product, capital and lab our market and
which resulted into world of capitalization, corporate
culture, business ethics which was found important for the
existence of corporation in the world market place.

11. Birla Committee

12. About
• Appointed on May 7, 1999 by SEBI.
• Consisted of 17 members under the Chairmanship of
Shri Kumar Mangalam Birla.
• Its report is the 1st formal & comprehensive attempt to
evolve a Code of Corporate Governance.
• Provides recommendation to distinguish the
responsibilities & obligations of the Board & Mgmt.
• Emphasizes the rights of shareholders in demanding
corporate governance.

13. • A statutory rather than voluntary code would be
purposive and meaningful.
• Took into account steps already taken by SEBI.
• 3 key constituents of Corporate Governance –
Shareholders, Board of Directors & Mgmt.
• It attempted to identify the roles & responsibilities of
the key constituents.
• Recognition of 3 key aspects of Corporate Governance
– Accountability, Transparency & Equality of treatment
for all stakeholders.
• Draft report was made public by media & was put on
SEBI’s website for comments

14. • Sent to Chambers of Commerce, Stock exchanges,
ICAI, ICSI, Association of Merchant Bankers,
Association of Mutual Funds, Association of Investors,
Financial Institution & Sir Adrian Cadbury

15. Why was this committee formed?
• Better and more transparent reporting
practices
• Adequate attention to the basic
procedures for shareholders’ service
• Instrument of investor protection
• To prevent insider trading
• Markets and investors take notice of
well-managed companies
• Concern about the importance of the
subject and of the need to raise the
standards of corporate governance

16. objective
• Enhancement of shareholder value, keeping in view the
interests of other stakeholder
• To treat the code not as a mere structure, but as a way
of life
• Proactive initiatives taken by the companies themselves
and not in the external measures