The document discusses the principles and importance of corporate governance, highlighting its role in ensuring ethical management, stakeholder fairness, and transparency. It outlines the responsibilities of the board of directors, management, and shareholders and emphasizes the consequences of poor governance, such as loss of trust and difficulty in raising capital. Additionally, it touches on recent trends in e-governance and the impact of virtual shareholder engagement during the COVID-19 pandemic.

1. E GOVERNANCE AND TRENDS IN
E GOVERNANCE
S.SOBHIKA
I M.COM CS
232CR006

2.  Corporate Governance is a continuous process of applying the
best management practices, ensuring the law is followed the
way intended, and adhering to ethical standards by a firm for
effective management, meeting stakeholder responsibilities,
and complying with corporate social responsibilities.
 It contains policies and rules to maintain a strong relationship
between the owners of the company (shareholders), the Board
of Directors, management, and various stakeholders like
employees, customers, Government, suppliers, and the general
public. It applies to all kinds of organizations-profit or not-for-
profit.
WHAT IS CORPORATE
GOVERNANCE?

3.  Board of Directors: Board of Directors takes crucial decisions to
attain long-term business objectives. They are also referred to as
“Those Charged With Governance” (TCWG).
 Management: The management is a subset of the BOD led by the
Chief Executive Officer (CEO) of the company. The CEO is
responsible for business operations, formulation of strategies, and
evaluation of associated risks
 Shareholders: The stockholders are investors who put their hard-
earned money into the company anticipating positive returns. They
cannot track corporate affairs on a daily basis, and therefore, rely
on the directors. Further, shareholders appoint auditors to dig into
the business’s financial affairs—provide the audit report.
STRUCTURE OF CORPORATE
GOVERNANCE

4.  Corporate Governance ensures that stakeholders are not deprived of
their rights. In addition, it facilitates compliance. It initiates the
formulation of seamless procedures and practices ensuring
transparency. It limits corruption and other malpractices.
 An efficient framework facilitates better risk mitigation; such
balanced firms attract more Investors. Good Governance attracts top
talents. Ultimately, a well-run ship reflects into better share prices.
 Corporate governance is important because it creates a system of
rules and practices that determines how a company operates and
how it aligns with the interest of all its stakeholders. Good corporate
governance leads to ethical business practices, which leads to
financial viability. In turn, that can attract investors.
IMPORTANCE OF CORPORATE
GOVERNNCE

5.  Fairness
The board of directors must treat shareholders, employees, vendors,
and communities fairly and with equal consideration.
 Transparency
The board should provide timely, accurate, and clear information about
such things as financial performance, conflicts of interest, and risks to
shareholders and other stakeholders.
 Responsibility
The board is responsible for the oversight of corporate matters and
management activities. It must be aware of and support the successful,
ongoing performance of the company. Part of its responsibility is to
recruit and hire a CEO. It must act in the best interests of a company
and its investors.
PRINCIPLES OF CORPORATE
GOVERNANCE

6.  Poor Governance can destroy a business all the way to its shutdown.
It paves the way for accounting scandals, lack of internal control,
dishonest managers, and non-disclosure of financial facts.
 Without structure, running a business becomes difficult. Poorly run
firms even restrict auditors from getting to the bottom of issues. It
leads to inaccurate financial reporting. In such firms, top
management often plunders enormous amounts from the corporate
funds.
 Deciding on the compensation for the top-level executives is a
crucial part of Governance. Sometimes, vague administration leads
to favoritism and discrimination. Moreover, such a corporation loses
the confidence of the investors, financiers, auditors, directors, and
employees. Such lapses can severely tarnish a firm’s brand image.
ISSUES OF CORPORATE
GOVERNANCE

7.  Loss of Shareholder Confidence and Trust
When a company deviates from its corporate governance strategy it sends a
signal to its shareholders that it cannot be trusted. This erodes any
confidence that the shareholders had in the business and leads them to feel
cheated or misled. If shareholders believe bad business decisions are in the
company's immediate future, they may jump ship to avoid any potential
loss.
 Difficulty Raising Capital
A lack of adherence to a company’s corporate governance strategies can
also scare away investors. For investors, one of the most important aspects
when making an investment decision is the level of implementation
of corporate governance principles (public disclosure of information,
protection of shareholder rights, and equal treatment of shareholders) and
profitability, which ensures return on their investment.
CONSEQUENCES OF POOR
CORPORATE GOVERNANCE

8.  E-corporate governance or the use of technologies and information
systems (ISs) in corporate governance, is still a subject that is too
seldom addressed in business research. This paper is at the
intersection between two fields of research (corporate governance
and the management of ISs), which are interdependent in ways that
are still unexplored. The paper analyzes the implications of internet
voting (IV) at shareholders’ annual meetings (SAM) for the
corporate governance of listed companies in France, in particular for
the relationship between executives and shareholders. Most of the
studies that have dealt with IV at SAM have focused on techno-legal
issues and were often conducted by business law researchers. The
purpose of this paper is to investigate the implications of the new
voting system through the prism of corporate governance.
E CORPORATE GOVERNANCE

9.  Shareholder Influence Grows
With the global battle against COVID-19 far from over, many companies continued to hold
annual shareholder meetings virtually in 2021. While the pandemic may have inhibited in-
person meetings, it did not stifle investor engagement through the shareholder proposal
process. In fact, the 2021 proxy season brought a surge of proposals focused heavily on
political lobbying expenditures, emissions and environmental degradation, workforce
diversity, and other social initiatives. These proposals were met with record breaking
‑
support as a total of 71 shareholder proposals passed, an increase of nearly 60% over 2020.
As shareholders' voices on corporate governance grew louder, regulatory developments
changed the landscape for shareholder engagement in other ways as well.
 Enterprise Risk Management
In September, the Delaware Chancery Court issued yet another reminder of the importance
of managing increasing scrutiny over boards' careful oversight of mission-critical
enterprise risks, allowing Caremark claims against Boeing's board of directors to proceed
past a motion to dismiss for what the plaintiffs claimed were failures to: (i) identify and
address risks related to the safety of certain sensors used in, and (ii) promptly report safety
problems experienced by, its 737 MAX airplanes.
TRENDS IN E GOVERNANCE