Corporate Governance

OCT. 2018
Corporate Governance
Presented to: Dr. Lobna El dessouky
Prepared by: Mohamed Kenawy
MBA, BRM - ESLSCA Business School

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What’s Corporate Governance?
Corporate governance is really important topic for companies today. Financial crises, in which the
economy suffered, corporate governance played a role as a priority. The focus of governance systems
on the minimum use of administrative authority in these institutions, as well as senior leadership, the
concept of corporate governance is a reform approach to work by setting the parameters of the
boundaries of public interests and the special rights of shareholders.
Corporate governance is the arrangement of standards and procedures through which all parties of
the company coordinate. Corporate governance mainly involves the organization of the interests of
various partners of the organization such as investors, customers, lenders, government. Reflecting
that the corporate governance system further provides the system to achieve the objectives of the
enterprise, it integrates the goals and objectives of each administrative department, from work plans
and internal controls to measurement of performance and disclosure of companies.
Governance particularly points to procedures, controls and objectives set up to organize the
corporate behavior. Counselors and mediators are vital partners who influence management in some
way; but these are not models of governance. Senior management is important in governance and
can have real implications for equity valuation.
Organizations that actualize the standards of governance are fortified The level of trust and certainty
of its investors This means the BOD and the Top leading Management know about dangers that
encompass the organization and consequently its capacity to oversee and lessen these dangers,
which encourages the financial specialist to settle on his speculation choice while considering the
other essential norms of venture; Their trust in this organization has the upsides of giving equity and
straightforwardness to all partners. Financial specialists regularly have the experience to deal with
the organizations they put resources into in light of the fact that they do not have the time and
experience to oversee them.

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From this perspective, all of the firms need to implement the governance for enhancing the
shareholders’ confidence of the members of BOD and making sure that they are committed to
achieve the objectives of the company clearly.
The challenges are that the directors are not generally the proprietors of the corporate, it is The
administrator liable to have individual interests over the proprietor's advantages, henceforth the
need to actualize corporate administration by building jobs that go for incorporating and fortifying
the connection between the administration of the organization and its proprietor and all partners
and along these lines accomplishing the standard of disclosure and transparency.
Disclosure and transparency are one of the important pillars of corporate governance. It enables
shareholders to obtain the information that they need in a clear and fair manner. Listed companies
will market the financial claim to enhance disclosure procedures and regulations of supervision in
writing. Companies should also accompany their financial statements report by the BOD containing a
presentation For the Company’s operation during the last financial year, and what are influencing its
business and financial position of the company.
Corporate Governance is the way a corporation polices itself. It intends to increase accountability,
transparency, efficiency of the management and environment friendly business practices. It
encompasses the board of directors and various stakeholders, namely Employees, Investors,
Customers, Suppliers, Creditors and its goals broadly include:
(1) Keeping the benefit of shareholders at the top of the priority list.
(2) Treating Shareholders similarly.
(3) Ensuring Transparency & Ethical Behaviors.
(4) Mitigating the Risks.
(5) Safeguarding the public image of the organization.

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Corporate Governance is taking the centre stage. The importance of it lies in several aspects, the
most important of which is the following:
1. Economy:
CG increases the level of efficiency of the firm because of its importance and assistance to the
stability of financial markets and raising Transparency and attracting investment from abroad
both internal and external, also in mitigating the risks that could face the economic system.
2. Companies:
Executing the standards of governance encourages companies to make a sound workplace, to
accomplish better execution with the accessibility of governance and subsequently the
monetary estimation of the organization notwithstanding great governance, Helping
organizations to get finance from related markets and get subsidizing at a lower cost It enables
them to grow their exercises, lessen dangers, Building trust with partners.
3. Investors and shareholders:
corporate governance points organizations to shield ventures from presentation For the
misfortune because of maltreatment of influence in the non the enthusiasm of financial
specialists likewise plans to expand Investment restores, investors' value and incentive As well as
lessening strife circumstances Interests; the organization's promise to apply guidelines
Governance assumes the job of investors in support In settling on key choices with respect to
administration The organization knows about everything identified with their speculations.
4. Other stakeholders:
Governance looks to construct a shut and solid connection between the administration of the
organization its workers, providers, and others; Good governance upgrades the certainty of all
clients to add to the organization's execution and accomplishing its vital destinations.

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Corporate Governance and the Board of Directors:
The BOD is the fundamental direct accomplice influencing corporate governance. Officials are picked
by speculators or chosen by other board individuals, and they address investors of the association.
The board is depended with settling on basic choices, for instance, corporate officer arrangements,
official pay. In a couple of cases, board duties reach out past budgetary enhancement, when investor
objectives require certain social or normal worries to be sorted out.
Boards are regularly made of inside and autonomous individuals. Insiders are significant investors,
organizers and administrators. Free chiefs don't share the ties of the insiders, yet they are picked in
light of their experience overseeing or coordinating other huge organizations. Independents are
viewed as accommodating for administration since they weaken the convergence of intensity and
help adjust investor enthusiasm with those of the insiders.
An organization is a system set up to enable distinctive gatherings to contribute capital, expertise,
and work for their shared advantage. The financial specialist/investor takes part in the benefits (as
profits and stock cost increments) of the venture without assuming liability for the tasks.
Administration runs the organization without being in charge of expressly giving assets. To make this
conceivable, laws have been passed that give investors restricted risk and, correspondingly,
constrained contribution in a company's exercises. That association includes, be that as it may, the
privilege to choose chiefs who have a legitimate obligation to speak to investors and ensure their
interests. As agents of the investors, chiefs have both the specialist and the duty to build up
fundamental corporate strategies and to guarantee that they are pursued.
The governing body, thusly, has a commitment to endorse all choices that may influence the long
haul execution of the organization. This implies the partnership is on a very basic level administered
by the top managerial staff regulating top administration, with the simultaneousness of the investor.
The term corporate administration alludes to the relationship among these three gatherings in
deciding the bearing and execution of the organization. Over the previous decade and a half,
investors and different premium gatherings have truly scrutinized the job of the top managerial staff
in companies. They are worried that inside board individuals may utilize their situation to quill their
own homes and that outside board individuals frequently need adequate learning, association, and
excitement to complete a sufficient activity of checking and giving direction to the top management.
The overall population has not just turned out to be more mindful and more reproachful of
numerous sheets' evident absence of duty regarding corporate exercises; it has started to push
government to request responsibility. Thus, the board as an elastic stamp of CEO or as a bastion of
the "old-kid" choice framework is gradually being supplanted by more dynamic, more expert sheets.
Dreadful corporate governance can give motivation to feel vague around an association's resolute
quality, reliability or duty to financial specialists — which can have recommendations on the
organization's money related prosperity. Versatility or support of unlawful activities can make
shames like the one that shook Volkswagen AG in 2015, when it was revealed that the company had
settled engine outpourings tests in America and Europe. Volkswagen saw its stock shed about a large
bit of its motivator in the days following the start of humiliation, and its overall arrangements in the
vital whole month following the news fell 4.5%.

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Associations that don't partake sufficiently with analysts or don't pick inspectors with the best
possible scale can convey tricky or defiant financial results. Horrendous authority compensation
packs disregard to make perfect helper for corporate officers. Insufficiently sorted out sheets make it
unreasonably troublesome for financial specialists, making it difficult to expel unfit officeholders.
Corporate transformed into an issue that is asking to be tended to after the 2002 introduction of the
Sarbanes-Oxley Act in the United States, which was acquainted with restore open trust in
associations and markets in the wake of accounting blackmail bankrupted conspicuous associations.
Incredible corporate organization makes a direct course of action of precepts and controls in which
speculators, boss and officers have balanced persuading powers. Most associations attempt to have
an unusual condition of corporate organization. For a few speculators, it isn't adequate for an
association to just be helpful; it similarly needs to demonstrate extraordinary corporate citizenship
through common care, moral lead and sound corporate organization practices.
Responsibilities of the Board
The Board of Directors is in charge of the firm Full regardless of whether the type of panels or
designated to goals or Other people do a portion of his activities and may not board Management
Issuing general or inconclusive commands The duties of the BOD must be plainly characterized in
Company's Articles of the Association. The top managerial staff must play out its obligations
dependably, steadfastly, truly and with intrigue. An individual from the Board of Directors will be
focused on the enthusiasm of the Company when all is said and not to the interests of the gathering
he or she has voted in favor of in the BOD.
The five BOD duties and responsibilities are:
1. Successful Board Leadership.
2. Plans and the objectives of the organization.
3. The general Risk profile of the corporate.
4. Progression making arrangements for the board and best administration group
5. Sustainability & Manageability

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Classification of Directors:
The Board of Directors ought to keep up a level Which requires freedom in the basic leadership
process That will accomplish the goals of the organization and its investors, so it should most of the
individuals from the Board will be non-individuals and that the quantity of autonomous individuals is
no under Two or 33% of the individuals from the Council, whichever is more.
Executive Member: He is a member of the executive management of the Firm with daily reporting.
Non-executive member: a member who is not being full time to manage the company and not
participate in its business daily.
Independent Member: Enjoys full independence in its status and decisions.
Top Management obligations, particularly those of the CEO, include getting things achieved through
and with others with the end goal to meet the corporate destinations. The Top administration's
activity is in this manner multidimensional and is arranged toward the welfare of the aggregate
association. Particular best administration undertakings change from firm to firm and are produced
from an examination of the mission, targets, methodologies, and key exercises of the organization.
Assignments are regularly separated among the individuals from the best administration group. A
decent variety of abilities would thus be able to be essential. Research shows that the best
administration groups with a decent variety of useful foundations, encounters, and time allotment
with the organization have a tendency to be essentially identified with enhancements in the
corporate piece of the overall industry and profitability.90 also, very assorted groups with some
worldwide experience have a tendency to underline universal development systems and vital
advancement, particularly in dubious conditions, as a way to support monetary execution.

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Different governancestobe addressed inproject finance:
The governance of a project looks like the governance of an organization. There are three pillars of
project governance like the graph below:
Project governance is the arrangement of strategies, directions, capacities, procedures, methods and
duties that characterize the foundation, management and control of ventures, projects or portfolios.
A few ventures are run exclusively by the project chief. Where this is fitting for the sort of task, and
the association, it isn't important to have every one of the parts of governance that are talked about
in this segment.

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Essential elements of good project governance:
 Alignment to organizational objectives: implies that the ventures attempted by an association
ought to have the capacity to illustrate, the commitment to the association's targets. With
this commitment plainly expressed then the venture setting is clear and the governance can
guarantee that the task is centered on the result as opposed to exercises.
 The golden thread of delegated authority: is an immediate chain of responsibility. Inside this
tie every individual has to recognize what their position is and what should be alluded to a
more elevated amount of power inside the chain.
 Reporting: those to whom duties have been assigned ought to intermittently investigate
advance. Notwithstanding period revealing, extra reports should be made whether the
individual with assigned obligation can't satisfy that duty, or if irreconcilable circumstances
emerge.
 Independent assurance: is an offset to self-revealing, and is a free check of the structures and
procedures to audit whether the destinations will be met.
 Decision gates: at indicated focuses in the task life cycle − give formal purposes of control
where a choice is made to allow or recharge expert for the undertaking to proceed.
Project Governance Principles:
 Ensure a single point of accountability for the success of the project.
 Project ownership independent of Asset ownership, Service ownership or other stakeholder
group.
 Ensure separation of stakeholder management and project decision making activities.
 Ensure separation of project governance and organizational governance structures.
Governance can be among the drier subjects in project management, however it’s one among the
foremost necessary. It’s the manner that senior management groups grasp that you just do an
honest job and it reassures them that the project is development because it ought to.
It conjointly provides the checks and balances necessary for managers to understand that cash is
being spent in ways in which are acceptable and aligned to the business case.

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What are the risks involvedinnot applying corporate governance?
Through the reasonable forces of the Board of Directors and the significance of isolating the capacity
of the Chairman and individuals from the Board of Directors from one viewpoint and official
administration on the other, notwithstanding the advancement and assessment of things to the
future plan of the organization.
There are many risks could be found if the firms not applying corporate governance, I will summarize
it in clear points:
 Failure to convey completely in the suitable time.
 Confusing in decision making and responsibilities.
 Non-arrangement of stakeholders.
 Lack of corporate direction & control.
 Disadvantages to shareholders, stakeholders and others.
 The difficulty of continuity of the company.
 The risk of maintaining economic reputation, especially listed on the stock exchange.
 Difficulty of granting funding to expand the project
 Difficulty attracting new investments without applying the corporate governance.
 Failure in social responsibility.
 Lack of investments cause not applying the corporate governance.

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The Conclusion:
Corporate Governance has been a standout between the most essential subjects in local and global
establishments and associations. The significance of this issue has expanded in many created and
rising economies as of late, particularly after a progression of budgetary emergencies that happened
in numerous organizations which were activated by money related defilement and bungle, As well as
an absence of straightforwardness, as these emergencies and breakdown have caused numerous
investors considerable material misfortunes. The significance of governance has expanded because
of the propensity of numerous nations of the world to swing to entrepreneur financial frameworks in
which they depend intensely on privately owned businesses.
Therefore, enthusiasm for the idea of corporate governance has expanded and has turned out to be
one of the principle columns on which the monetary units ought to be based.
The importance of implementing governance principles in the firms has become urgent in the
context of globalization, economic opening and crises resulting from mismanagement. Previous years
have shown that the economies of many countries have faltered as a result of their lack of good
governance, which has severely affected shareholders, creditors, suppliers and others.
The most imperative parts of applying corporate governance is the following:
 Raise the company's economic value and enhance its performance.
 Increasing the confidence of the investors in the firms that using the corporate governance
models.
 Reducing risks and reducing corporate corruption and enhancing oversight through rules for
good governance, disclosure and accounting.
If we try to talk about the culture of the corporate governance, it should mean to accomplish ideal
speculation and support the capacities and assets of organizations by making A business domain
dependent on duty, control and consistence.
considering the standards of clearness and transparency in deciding the targets and vital strategies
for success of the organization, The announcement of the rights and commitments of every one of its
elements, As well as dealing with its association with providers and lenders Consumers, controllers
and exercises.

Corporate Governance

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