This document discusses corporate governance in India. It provides definitions and principles of corporate governance, including its focus on sustainable development of stakeholders, best management practices, and adherence to laws and ethics. The four pillars of corporate governance are identified as accountability, fairness, transparency, and independence. The Securities and Exchange Board of India introduced Clause 49 to strengthen corporate boards through greater independent director representation and requirements around audit committees, codes of conduct, and whistleblower policies. Corporate governance in India has evolved significantly since economic liberalization in the 1990s to meet global standards as Indian companies increasingly compete internationally.
The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).
The corporate governance framework consists of
(1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards,
(2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and
(3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.
The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).
The corporate governance framework consists of
(1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards,
(2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and
(3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.
Corporate Governance is one of the important criteria for foreign institutional investors to decide on which company to invest in. The corporate practices in India emphasize the functions of audit and finances that have legal, moral and ethical implications for the business and its impact on the shareholders
In this presentation i have collected all theories portion for the students as well as teacher
The governance system that a company adopts is not independent of its environment. Instead, it is shaped by a variety of factors inherent to the business setting.
This Quick Guide explains the factors that shape governance systems around the world. It also provides an overview of governance systems in selected countries.
It answers the questions:
• Why do governance systems vary?
• How important are capital markets?
• What is the impact of legal tradition?
• Why do accounting standards matter?
• How do societal values shape governance?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
The Cadbury Committee was set-up in May 1991 by the Financial Reporting Council of the London Stock Exchange.
The committee published its report in December 1992.
Adrian Cadbury the chairman of the Cadbury committee.
The report sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures.
Analysis of Nine Pillars of Corporate Governance Principles for Small and Med...Karan Mahajan, CCRA
The report involved critically analyzing the nine pillars of corporate governance for SMEs in Dubai, providing recommendation for strengthening the principles as well as comparison with OECD Principles of Corporate Governance, Commonwealth Association for Corporate Governance and Corporate Governance principles in India.
Relationship Between Corporate Governance and Companies Act 2006 - NepalNitesh Khatiwada
The slides present the relationship between corporate governance and Nepal's Companies Act 2006. It specifically identities the sections in the Companies Act that are designed to serve the universal corporate governance framework.
The topic is focuses on the following terms.
1. Corporate governance.
2. Public sector banks.
3. Role of corporate governance in public sector bank.
4. Corporate governance in SBI.
Introduction to Corporate Governance
Corporate Governance on Directors
Corporate Governance on Shareholders
Corporate Governance Practice in Sri Lanka
Benefits and Issues of Corporate Governance
Corporate Governance is one of the important criteria for foreign institutional investors to decide on which company to invest in. The corporate practices in India emphasize the functions of audit and finances that have legal, moral and ethical implications for the business and its impact on the shareholders
In this presentation i have collected all theories portion for the students as well as teacher
The governance system that a company adopts is not independent of its environment. Instead, it is shaped by a variety of factors inherent to the business setting.
This Quick Guide explains the factors that shape governance systems around the world. It also provides an overview of governance systems in selected countries.
It answers the questions:
• Why do governance systems vary?
• How important are capital markets?
• What is the impact of legal tradition?
• Why do accounting standards matter?
• How do societal values shape governance?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
The Cadbury Committee was set-up in May 1991 by the Financial Reporting Council of the London Stock Exchange.
The committee published its report in December 1992.
Adrian Cadbury the chairman of the Cadbury committee.
The report sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures.
Analysis of Nine Pillars of Corporate Governance Principles for Small and Med...Karan Mahajan, CCRA
The report involved critically analyzing the nine pillars of corporate governance for SMEs in Dubai, providing recommendation for strengthening the principles as well as comparison with OECD Principles of Corporate Governance, Commonwealth Association for Corporate Governance and Corporate Governance principles in India.
Relationship Between Corporate Governance and Companies Act 2006 - NepalNitesh Khatiwada
The slides present the relationship between corporate governance and Nepal's Companies Act 2006. It specifically identities the sections in the Companies Act that are designed to serve the universal corporate governance framework.
The topic is focuses on the following terms.
1. Corporate governance.
2. Public sector banks.
3. Role of corporate governance in public sector bank.
4. Corporate governance in SBI.
Introduction to Corporate Governance
Corporate Governance on Directors
Corporate Governance on Shareholders
Corporate Governance Practice in Sri Lanka
Benefits and Issues of Corporate Governance
Notes of Module 5 Corporate Governance
Content
Concept of Corporate Governance
Corporate Governance in India
Objective of Corporate Governance
Features of Corporate Governance
Elements of Corporate Governance
Importance of Corporate Governance
Important Issues in Corporate Governance
Corporate Governance and Agency Theory
Reforming Board of Directors
*Birla Committee
*Naresh Candra Committee
*Narayana Murthy Committee
Bibliography
www.google.com
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This presentation slides includes basic definitions to Corporate Governance (CG), Objective to Corporate Governance, Major Constituents of Corporate Governance, Participants to CG, Regulatory bodies in India for CG and Benefit of CG to organizations.
Senior Project and Engineering Leader Jim Smith.pdfJim Smith
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Jim Smith
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jimsmith30024@gmail.com
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2. Corporate Governance
Corporate Governance is the application of
best management practices, compliance of
law in true letter and spirit and adherence to
ethical standards for effective management
and distribution of wealth and discharge of
social responsibility for sustainable
development of all stakeholders.
Conduct of business in accordance with
shareholders desires (maximising wealth)
while confirming to the basic rules of the
society embodied in the Law and Local
Customs
3. Corporate Governance
Relationships among various participants in
determining the direction and performance of
a corporation.
Effective management of relationships among
– Shareholders
– Managers
– Board of directors
– employees
– Customers
– Creditors
– Suppliers
– community
4. Why Corporate Governance?
Better access to external finance
Lower costs of capital – interest rates on
loans
Improved company performance –
sustainability
Higher firm valuation and share performance
Reduced risk of corporate crisis and scandals
5. Principles of Corporate Governance
Sustainable development of all stake
holders- to ensure growth of all individuals
associated with or effected by the enterprise
on sustainable basis
Effective management and distribution of
wealth – to ensue that enterprise creates
maximum wealth and judiciously uses the
wealth so created for providing maximum
benefits to all stake holders and enhancing its
wealth creation capabilities to maintain
sustainability
6. Discharge of social responsibility- to ensure that
enterprise is acceptable to the society in which it is
functioning
Application of best management practices- to
ensure excellence in functioning of enterprise and
optimum creation of wealth on sustainable basis
Compliance of law in letter & spirit- to ensure value
enhancement for all stakeholders guaranteed by the
law for maintaining socio-economic balance
Adherence to ethical standards- to ensure
integrity, transparency, independence and
accountability in dealings with all stakeholders
7. Four Pillars of Corporate Governance
Accountability
Fairness
Transparency
Independence
8. Accountability
Ensure that management is accountable to the
Board
Ensure that the Board is accountable to
shareholders
9. Fairness
Protect Shareholders rights
Treat all shareholders including
minorities, equitably
Provide effective redress for violations
10. Transparency
Ensure timely, accurate disclosure on all
material matters, including the financial
situation, performance, ownership and
corporate governance
11. Independence
Procedures and structures are in place so as
to minimise, or avoid completely conflicts of
interest
Independent Directors and Advisers i.e. free
from the influence of others
12. Elements of Corporate Governance
Good Board practices
Control Environment
Transparent disclosure
Well-defined shareholder rights
Board commitment
13. Good Board Practices
Clearly defined roles and authorities
Duties and responsibilities of Directors
understood
Board is well structured
Appropriate composition and mix of skills
14. Good Board procedures
Appropriate Board procedures
Director Remuneration in line with best
practice
Board self-evaluation and training conducted
15. Control Environment
Internal control procedures
Risk management framework present
Disaster recovery systems in place
Media management techniques in use
16. Control Environment
Business continuity procedures in place
Independent external auditor conducts audits
Independent audit committee established
17. Control Environment
Internal Audit Function
Management Information systems established
Compliance Function established
18. Transparent Disclosure
Financial Information disclosed
Non-Financial Information disclosed
Financials prepared according to International
Financial Reporting Standards (IFRS)
20. Well-Defined Shareholder Rights
Minority shareholder rights formalised
Well-organised shareholder meetings
conducted
Policy on related party transactions
22. Board Commitment
The Board discusses corporate governance
issues and has created a corporate
governance committee
The company has a corporate governance
champion
A corporate governance improvement plan
has been created
Appropriate resources are committed to
corporate governance initiatives
23. Board Commitment
Policies and procedures have been formalised
and distributed to relevant staff
A corporate governance code has been
developed
A code of ethics has been developed
The company is recognised as a corporate
governance leader
24. Other Entities
Corporate Governance applies to all types of
organisations not just companies in the
private sector but also in the not for profit and
public sectors
Examples are
NGOs, schools, hospitals, pension
funds, state-owned enterprises
25. Corporate governance in India
The Indian corporate scenario was more or less
stagnant till the early 90s.
The position and goals of the Indian corporate
sector has changed a lot after the liberalisation
of 90s.
India’s economic reform programme made a
steady progress in 1994.
India with its 20 million shareholders, is one of
the largest emerging markets in terms of the
market capitalization.
26. Corporate governance of India has undergone a
paradigm shift
In 1996, Confederation of Indian Industry
(CII), took a special initiative on Corporate
Governance.
The objective was to develop and promote a
code for corporate governance to be adopted
and followed by Indian companies, be these in
the Private Sector, the Public Sector, Banks or
Financial Institutions, all of which are corporate
entities.
This initiative by CII flowed from public concerns
regarding the protection of investor
interest, especially the small investor, the
promotion of transparency within business and
industry
27. Securities and Exchange Board of India
The Government of India's securities watchdog, the
Securities Board of India, announced strict corporate
governance norms for publicly listed companies in
India.
The Indian Economy was liberalised in 1991. In
order to achieve the full potential of liberalisation and
enable the Indian Stock Market to attract huge
investments from foreign institutional investors (FIIs),
it was necessary to introduce a series of stock
market reforms.
SEBI, established in 1988 and became a fully
autonomous body by the year 1992 with defined
28. SEBI
On April 12, 1988, the Securities and Exchange
Board of India (SEBI)was established with a dual
objective of protecting the rights of small investors
and regulating and developing the stock markets in
India.
In 1992, the ‘BSE’ ,the leading stock exchange in
India, witnessed the first major scam masterminded
by Harshad Mehta.
Analysts felt that if more powers had been given to
SEBI,the scam would not have happened.
•As a result the ‘GoI’ brought in a separate legislation
by the name of ‘SEBI Act 1992’and conferred
statutory powers to it.
Since then, SEBI had introduced several stock
29. SEBI and Clause 49
SEBI asked Indian firms above a certain size
to implement Clause 49, a regulation that
strengthens the role of independent directors
serving on corporate boards.
On August 26, 2003, SEBI announced an
amended Clause 49 of the listing agreement
which every public company listed on an
Indian stock exchange is required to sign.
The amended clauses come into immediate
effect for companies seeking a new listing.
30. The major changes to Clause 49…
Independent Directors:- 1/3 to ½depending
whether the chairman of the board is a non-
executive or executive position.
Non-Executive Directors:- The total term of office
of non-executive directors is now limited to three
terms of three years each.
Board of Directors:- The board is required to
frame a code of conduct for all board members
and senior management and each of them have
to annually affirm compliance with the code.
31. Audit Committee:- Financial statements and the draft
audit report of management discussion and analysis of…
• Financial condition
• Result of operations of compliance with laws
• Risk management letters
• Letters of weaknesses in internal controls issued by
statutory
• Internal auditors
• Removal and terms of remuneration of the chief
internal auditor
Whistleblower Policy :- This policy has to be
communicated to all employees and whistleblowers
should be protected from unfair treatment and
termination.
Subsidiary Companies:- 50% non-executive directors &
1/3 & ½independent directors depending on whether the
chairman is non-executive or executive.
32. Conclusion
As Indian companies compete globally for access
to capital markets, many are finding that the
ability to benchmark against world-class
organizations is essential.
For a long time, India was a managed, protected
economy with the corporate sector operating in
an insular fashion.
But as restrictions have eased, Indian
corporations are emerging on the world stage and
discovering that the old ways of doing business
are no longer sufficient in such a fast-paced
global environment.