Corporate governance involves the rules, processes, and practices by which companies are directed and controlled. A company's board of directors plays a primary role in governance. Good governance promotes transparency, accountability and ethical business practices, while bad governance can undermine a company's operations and profitability. There are several theories of governance, including agency theory which focuses on the relationship between shareholders and directors, and stakeholder theory which considers the interests of all parties impacted by a company. Countries have developed different governance models, such as the Anglo-American model which emphasizes shareholder rights and German model which involves worker representation on boards.

2. WHAT IS CORPORATE
GOVERNANCE?
Corporate governance is the structure of rules, practices, and processes
used to direct and manage a company. A company's board of directors is
the primary force influencing corporate governance. Bad corporate
governance can cast doubt on a company's operations and its ultimate
profitability.

3. ORGANISATION BENEFIT
• Greater efficiency, accountability, and ownership by members of the
board and other top management.
• Improved relations with investors and prospective investors because of
the board members’ in-depth understanding of corporate governance.
• Improved transparency and integrity of information among and from all
stakeholders.
• The better strategic and operational direction towards the achievement
of organisational objectives.

4. • Shift from a mere compliance mentality to a strategic, well-suited
approach to defining processes and systems.
• Identification and implementation of best practices of other successful
boards
• A positive and ambitious board culture
• Greater mitigation of risks and unethical practices
• Better crisis management

5. CORPORATE GOVERNANCE POLICIES
Written corporate governance policies ensure that organizations are run in
a transparent, ethical manner, promoting good business practices.
Corporate governance policies, formulated by the board and management
and made available to all stakeholders, should ideally address the
following:
• Election of directors to the board
• The proportion of executive and non-executive directors on the board
• Disclosure of information on finance and operations

6. •Composition and independence of audit, nominating and
compensation committees
•Executive remuneration
•Board meetings and operations
•Shareholder rights

7. THEORIES OF CORPORATE GOVERNANCE
Some prominent theories of corporate governance are :
• Agency theory
• Stewardship theory
• Resource dependency theory
• Stakeholder theory
• Transaction cost theory
• Political theory

8. AGENCY THEORY
Agency theory defines the relationship between the principals (such as
shareholders of company) and agents (such as directors of company).
According to this theory, the principals of the company hire the agents to
perform work. The principals delegate the work of running the business to
the directors or managers, who are agents of shareholders. The
shareholders expect the agents to act and make decisions in the best
interest of principal. On the contrary, it is not necessary that agent make
decisions in the best interests of the principals. The agent may be
succumbed to self-interest, opportunistic behavior and fall short of
expectations of the principal. The key feature of agency theory is
separation of ownership and control. The theory prescribes that people or
employees are held accountable in their tasks and responsibilities.

9. STEWARDSHIP THEORY
The steward theory states that a steward protects and maximises
shareholders wealth through firm performance. Stewards are company
executives and managers working for the shareholders, protects and make
profits for the shareholders. The stewards are satisfied and motivated when
organizational success is attained. It stresses on the position of employees
or executives to act more autonomously so that the shareholders’ returns
are maximized. The employees take ownership of their jobs and work at
them diligently.

10. STAKEHOLDER THEORY
Stakeholder theory incorporated the accountability of management to a
broad range of stakeholders. It states that managers in organizations have a
network of relationships to serve – this includes the suppliers, employees
and business partners. The theory focuses on managerial decision making
and interests of all stakeholders have intrinsic value, and no sets of
interests is assumed to dominate the others

11. RESOURCE DEPENDENCY THEORY
The resource dependency theory focuses on the role of board directors in
providing access to resources needed by the firm. It states that directors
play an important role in providing or securing essential resources to an
organization through their linkages to the external environment. The
provision of resources enhances organizational functioning, firm’s
performance and its survival. The directors bring resources to the firm,
such as information, skills, access to key constituents such as suppliers,
buyers, public policy makers, social groups as well as legitimacy.
Directors can be classified into four categories of insiders, business
experts, support specialists and community influentials.

12. TRANSACTION COST THEORY
Transaction cost theory states that a company has number of contracts
within the company itself or with market through which it creates value
for the company. There is cost associated with each contract with external
party; such cost is called transaction cost. If transaction cost of using the
market is higher, the company would undertake that transaction itself.

13. POLITICAL THEORY
Political theory brings the approach of developing voting support from
shareholders, rather by purchasing voting power. It highlights the
allocation of corporate power, profits and privileges are determined via the
governments’ favor

14. CORPORATE GOVERNANCE MODELS
The corporate governance models are broadly classified into following
categories:
• Anglo-American model
• The German model
• The Japanese model
• Social Control model

15. ANGLO-AMERICAN MODEL
Under the Anglo-American model of corporate governance, the shareholder rights are
recognised and given importance. Some of the features of this model are:
• This is shareholder oriented model. It is also called anglo-saxon approach to corporate
governance being the basis of corporate governance in Britain, Canada, America,
Australia and common wealth countries including India
• Directors are rarely independent of management
• Companies are run by professional managers who have negligible ownership stake. There
is clear separation of ownership and management.
• Institution investors like banks and mutual funds are portfolio investors. When they are
not satisfied with the company’s performance they simple sell their shares in market and
quit.
• The disclosure norms are comprehensive and rules against the insider trading are tight

16. GERMAN MODEL
This is also called European model. It is believed that workers are one of the
key stakeholders in the company and they should have the right to participate
in the management of the company. The corporate governance is carried out
through two boards, therefore it is also known as two-tier board model. These
two boards are:
• Supervisory board: the shareholders elect the members of supervisory
board. Employees also elect their representative for supervisory board
which are generally one-third or half of the board.
• Board of management or management board: the supervisory board
appoints and monitors the management board. The supervisory board has
the right to dismiss the management board and re-constitute the same.

17. JAPANESE MODEL
Japanese companies raise significant part of capital through banking and
other financial institutions. Since the banks and other institutions stakes
are very high in businesses, they also work closely with the management
of the company. The shareholders and main banks together appoint the
board of directors and the president. In this model, along with the
shareholders, the interest of lenders is recognised.

18. SOCIAL CONTROL MODEL
Social control model of corporate governance argues for full-fledged
stakeholder representation in the board. According to this model, creation
of stakeholders board over and above the shareholders determined board
of directors would improve the internal control systems of the corporate
governance. The stakeholders board consists of representation from
shareholders, employees, major consumers, major suppliers, lenders etc.

19. INDIAN MODEL
In India there are mainly three types of companies’ viz. Private companies,
public companies and public sector undertakings. Each of these companies
has distinct kind of shareholding pattern. Thus the corporate governance
model in India is a mix of Anglo-American and German models.

20. CORPORATE SOCIAL
RESPONSIBILITY
According to the world business council for sustainable development, CSR
is “the continuing commitment by business to contribute to economic
development while improving the quality of life of the workforce and their
families, as well as of the community and society at large.” CSR, in its
essence, looks beyond profits and instead focuses on how business can
benefit the greater community.

21. IMPORTANCE OF CSR
• It encourages customer loyalty
• It gives businesses a competitive edge
• Corporate responsibility makes employees happier and more fulfilled
• It makes a business more sustainable
• Customers are willing to pay more
• It attracts more investors
• Corporate responsibility attracts more employees
• Corporate responsibility can reduce costs
• Corporate responsibility opens up new opportunities/markets
• Corporate responsibility makes the world a better place

22. SOCIAL AUDIT
A social audit is a formal review of a company's endeavors, procedures,
and code of conduct regarding social responsibility and the company's
impact on society. A social audit is an assessment of how well the
company is achieving its goals or benchmarks for social responsibility.

23. ITEMS EXAMINED IN A SOCIAL AUDIT
• Environmental impact resulting from the company's operations
• Transparency in reporting any issues regarding the effect on the public or
environment.
• Accounting and financial transparency
• Community development and financial contributions
• Volunteer activity of employees
• Energy use or impact on footprint
• Work environment including safety, free of harassment, and equal opportunity
• Worker pay and benefits
• Nondiscriminatory practices

24. BUSINESS ETHICS
Business ethics is the study of appropriate business policies and practices
regarding potentially controversial subjects including corporate
governance, insider trading, bribery, discrimination, corporate social
responsibility, and fiduciary responsibilities. The law often guides business
ethics, but at other times business ethics provide a basic guideline that
businesses can choose to follow to gain public approval.

25. ETHICAL PRINCIPLES
• Honesty. Ethical executives are honest and truthful in all their dealings and they
do not deliberately mislead or deceive others by misrepresentations,
overstatements, partial truths, selective omissions, or any other means.
• Integrity. Ethical executives demonstrate personal integrity and the courage of
their convictions by doing what they think is right even when there is great
pressure to do otherwise; they are principled, honorable and upright; they will
fight for their beliefs. They will not sacrifice principle for expediency, be
hypocritical, or unscrupulous.
• Promise-keeping & trustworthiness. Ethical executives are worthy of trust.
They are candid and forthcoming in supplying relevant information and
correcting misapprehensions of fact, and they make every reasonable effort to
fulfill the letter and spirit of their promises and commitments.

26. • Loyalty. Ethical executives are worthy of trust, demonstrate fidelity and
loyalty to persons and institutions by friendship in adversity, support and
devotion to duty; they do not use or disclose information learned in
confidence for personal advantage. They safeguard the ability to make
independent professional judgments by scrupulously avoiding undue
influences and conflicts of interest.
• Fairness. Ethical executives and fair and just in all dealings; they do not
exercise power arbitrarily, and do not use overreaching nor indecent means
to gain or maintain any advantage nor take undue advantage of another’s
mistakes or difficulties. Concern for others. Ethical executives are caring,
compassionate, benevolent and kind; they like the golden rule, help those in
need, and seek to accomplish their business objectives in a manner that
causes the least harm and the greatest positive good.

27. • Commitment to excellence. Ethical executives pursue excellence in
performing their duties, are well informed and prepared, and constantly
endeavor to increase their proficiency in all areas of responsibility.
• Leadership. Ethical executives are conscious of the responsibilities and
opportunities of their position of leadership and seek to be positive ethical
role models by their own conduct and by helping to create an environment in
which principled reasoning and ethical decision making are highly prized.
• Accountability. Ethical executives acknowledge and accept personal
accountability for the ethical quality of their decisions and omissions to
themselves, their colleagues, their companies, and their communities.

28. • Respect for others. Ethical executives demonstrate respect for the
human dignity, autonomy, privacy, rights, and interests of all those who
have a stake in their decisions; they are courteous and treat all people
with equal respect and dignity regardless of sex, race or national origin.
• Law abiding. Ethical executives abide by laws, rules and regulations
relating to their business activities.
• Reputation and morale. Ethical executives seek to protect and build
the company’s good reputation and the morale of its employees by
engaging in no conduct that might undermine respect and by taking
whatever actions are necessary to correct or prevent inappropriate
conduct of others.

29. CONCLUSION
Corporate Governance is something that goes beyond the certain rules and
regulations mandated by the government. It’s the ethics and values that
drive an organization to conduct it’s business. Thus, it is the trust that the
organization establishes over time through its committed operation by
respecting the value and integrity of all its stakeholders. Being ethical
doesn’t mean sacrificing its profit or being forced to work at a lower
profit, but it is the mindset to be truthful in its conduct and still make profit
and maximize the wealth of its shareholder’s and ensure the continued
operation of the company in the long run .

30. THANK YOU