Corporate Governance - By Aditya Agarwal


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Corporate Governance - By Aditya Agarwal

  1. 1. Corporate Governance
  2. 2. Agenda <ul><li>Definition & Meaning </li></ul><ul><li>Reporting </li></ul><ul><li>Board </li></ul><ul><li>CEO </li></ul><ul><li>Senior Executives </li></ul>
  3. 3. Definition <ul><li>&quot;Corporate governance involves a set of relationships between… </li></ul><ul><li>A company’s management, </li></ul><ul><li>Its board, </li></ul><ul><li>Its shareholders </li></ul><ul><li>& other stakeholders. </li></ul><ul><li>Corporate governance also provides, </li></ul><ul><li>The structure through which the objectives of the company are set, </li></ul><ul><li>& the means of attaining those objectives and monitoring performance are determined.&quot; </li></ul>
  4. 4. Meaning <ul><li>It is a set of processes, customs, policies, laws, and institution affecting the way a company is directed, administered or controlled. </li></ul><ul><li>It is R elationships among the sakeholders . </li></ul><ul><li>The principal stakeholders: S hareholders, M anagement, and the B oard of D irectors. </li></ul><ul><li>Other stakeholders: E mployees, C ustomers, C reditors, S uppliers, R egulators, and the C ommunity at large . </li></ul><ul><li>multi-faceted subject. </li></ul>
  5. 5. Reporting <ul><li>According to Hierarchy… </li></ul><ul><li>Employees </li></ul><ul><li>Manager </li></ul><ul><li>CEO </li></ul><ul><li>Board </li></ul><ul><li>Stakeholders </li></ul>
  6. 7. Objectives of Reporting <ul><li>Transparency </li></ul><ul><li>Budgeting Integrity </li></ul><ul><li>Operating Performance </li></ul><ul><li>Stewardship </li></ul><ul><li>Systems and Controls </li></ul>
  7. 8. Board Of directors <ul><li>The Board of a Company provides </li></ul><ul><ul><li>Leadership and strategic guidance, </li></ul></ul><ul><ul><li>Objective judgment independence of the management to the Company, </li></ul></ul><ul><ul><li>& exercises control over the Company. </li></ul></ul><ul><li>The Board must fulfill its legal requirements & also must be aware of its responsibilities. </li></ul><ul><ul><ul><li>An effective corporate governance system is one, which allows the Board to perform these dual functions efficiently. </li></ul></ul></ul>
  8. 9. Size of the Board <ul><li>Optimum size of the Board (10-12) </li></ul><ul><li>Bigger boards would be less effective as there will be a problem of coordination. </li></ul>
  9. 10. Functions of the Board of Directors <ul><li>It directs the Company by formulating and reviewing the Company’s policies. </li></ul><ul><li>It controls the Company and its management by laying down the code of conduct. </li></ul><ul><li>They are accountable to the shareholders for creating, protecting and enhancing wealth and resources of the Company. </li></ul><ul><li>They are not involved in day to day management of the Company. </li></ul>
  10. 11. Composition of the Board of Directors <ul><li>Executive directors are involved in the day to day management of the Companies </li></ul><ul><li>Non executive directors bring external and wider perspective and independence to the decision making. </li></ul><ul><li>Non executive directors may be independent or non - independent. </li></ul>
  11. 12. Chairman of the Board <ul><li>The role of the Chairman is to ensure that the board meetings are conducted in an effective manner. </li></ul><ul><li>The Chairman’s role should in principle be different from that of the Chief Executive. </li></ul>
  12. 13. Board procedures <ul><li>The Board meetings should be held at least 4 times in a year with a maximum time gap of 4 months between any two meetings. </li></ul><ul><li>A director should not be a member in more than 10 committees or act as a Chairman of more than 5 committees across all companies in which he is a director. </li></ul><ul><li>Every director must inform the Company about the Committee positions he occupies in other Companies and notify changes as and when they take place. </li></ul>
  13. 14. The Chief Executive Officer <ul><li>CEOs can provide a stimulating platform to non-executive directors by scheduling regular meetings for them. </li></ul><ul><li>CEOs should gain the trust and confidence of all stakeholders by presenting the balance sheets, & particularly the earnings and profit figures. </li></ul><ul><li>It is the responsibility of CEOs to take adequate measures to ensure that non-executive directors are independent. </li></ul>
  14. 15. …Continued <ul><li>They carry out an audit on non-executive directors’ performance as well as that of the board. </li></ul><ul><li>CEOs may raise awareness amongst the board regarding conflicts of interest, sponsorships, etc… </li></ul>
  15. 16. Senior Executives <ul><li>“ Senior executives” consists generally a team of individuals at the highest level of organizational management who have the day-to-day responsibilities of managing a company or corporation . </li></ul>
  16. 17. Who are they? <ul><li>They hold specific executive powers conferred onto them with and by authority of the board of directors and/or the shareholders. </li></ul><ul><li>There are most often higher levels of responsibility, such as a board of directors and those who own the company shareholders. </li></ul><ul><li>They are sometimes referred to, within corporations, as executive management, top management, upper management, higher management, or simply seniors. </li></ul>
  17. 18. Skills Required by Senior Executives <ul><li>Basic Management and Leadership </li></ul><ul><li>Planning </li></ul><ul><li>Organizing </li></ul><ul><li>Leading </li></ul><ul><li>Coordinating activities /Resources </li></ul>
  18. 19. Role of Senior Executives <ul><li>The role of the Senior Executive is to design, develop and implement strategic plans for their organization in a cost-effective and time-efficient manner. </li></ul><ul><li>The Executives are also responsible for the day-to-day operation of the organization, including managing committees and staff and developing business plans in collaboration with the board for the future of the organization. </li></ul>
  19. 20. … Conitued <ul><li>The Executive Director is accountable to the President of the Board and reports to the board on a regular basis - quarterly, semiannually, or annually </li></ul><ul><li>As the title suggests, the Executive Director needs to be informed of everything that goes on in the organization </li></ul>
  20. 21. Created By- <ul><li>Aditya Agarwal </li></ul><ul><li>ThanK YoU… </li></ul>