corporategovernance-140201083035-phpapp02

8/11/2019 corporategovernance-140201083035-phpapp02

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CORPOR TE

GOVERN NCE

GAYATRI IYER

MBA


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CORPOR TE GOVERN NCE

Corporate governance is the set of processes,customs, policies, laws, and institutionsaffecting the way a corporation (or company) isdirected, administered or controlled. Corporategovernance also includes the relationships

among the many stakeholders involved and thegoals for which the corporation is governed. Insimpler terms it means the extent to whichcompanies are run in an open & honestmanner.


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ISSUES OF CORPOR TE

GOVERN NCE

Internal controls and internal auditors

The independence of the entity's externalauditors and the quality of their audits

Oversight of the preparation of the entity's

financial statements Review of the compensation arrangements

for the chief executive officer and other seniorexecutives


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SCOPE OF CORPOR TE

GOVERN NCE

Accountabilityof Board of Directors & their

constituent responsibilities to the ultimate owners-the shareholders.

Transparency, i.e. right to information, timeliness &integrity of the information produced.

Clarity in responsibilitiesto enhanceaccountability.

Quality & competence of Directorsand theirtrack record.

Checks & balancesin the process of governance.

Adherence to the rules,laws & spirit of codes.


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IMPORT NCE OF

CORPOR TE GOVERN NCE

Corporate governance ensures that a properly structured

Board, capable of taking independent & objective decisionsis at the helm of affairs of the company. This lays down theframework for creating long-term trust between thecompany & external providers of capital.

It improves strategic thinking at the top by inductingindependent directors who bring a wealth of experience & a

host of new ideas.

It rationalizes the management & monitoring of risk that acorporation faces globally.

Corporate governance emphasizes the adoption oftransparent procedures & practices by the Board, thereby

ensuring integrity in financial reports.


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CONTD

It inspires & strengthens investors confidence ensuring that there are adequate number of noexecutive & independent directors on the Board, to loafter the interests & well-being of all the stakeholders.

Corporate governance helps provide a degree confidence that is necessary for the proper functioning

a market economy, as it contemplates adherence ethical business standards.

Finally, globalization of the market place has usheredan era wherein the quality of corporate governance h

become a crucial determinant of survival of corporate.


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CODES OF CORPOR TE

GOVERN NCE

Codes of corporate governance have existed for more

than two decades and have been developed in manyjurisdictions worldwide.

Codesof corporate governance are defined as a set ofbest practice recommendations with regard to the

behavior and structure of the board of directors of afirm. In recent years, some codes have gone beyondthose boundaries to embrace the governancecharacteristics and behavior of institutional investorsand intermediaries as well.


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NEED OF CORPOR TE

GOVERN NCE CODE

Generally, originators of codes of corporate governance did not intenthem to be some kind of gentler version of one-size fits- all, rigid, a

binding regulation. Rather, they conceived of a code as an over-archinflexible, and principles-based framework that provides for companiadopting guidelines to either comply with provisions, or to explain wthey are not in compliance. This is often described as a soft standardapproach based on a comply or explain regime rather than hard rulpoliced by law and regulation. In most instances, codes are developed to

flexible enough to encompass the views of many actors within a singmarket: multiple company types, many industries, and many stakeholdgroups.

Codes aim to help guide the actions of the board or other markparticipants, and to provide benchmarks that can be used by others evaluate their performance in light of those standards.


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SOCI L RESPONSIBILITY OF

CORPOR TES

Corporate social responsibility may be referred to as "corporate

citizenship" and can involve incurring short-term costs that donot provide an immediate financial benefit to the company, butinstead promote positive social and environmental change.

Companies have a lot of power in the community and in thenational economy. They control a lot of assets, and may havebillions in cash at their disposal for socially conscious

investments and programs. Some companies may engage ingreen washing in corporate responsibility, but many largecorporations are devoting real time and money toenvironmental sustainability programs, alternative energy andvarious social welfare initiatives to benefit employees,customers, and the community at large.


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BENEFITS OF CSR

Win new business

Increase customer retention

Develop and enhance relationships withcustomers, suppliers and networks

Attract, retain and maintain a happyworkforce and be an Employer of Choice

Save money on energy and operating costs andmanage risk

Differentiate yourself from your competitors

Generate innovation and learning and enhance

your influence


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CORPOR TE SOCI L

REPORTING

Corporate social reporting is referred as the process

of communicating the social and environmentaleffects of economic organizations. The reporting isalso a form of corporate self-regulation integratedinto a business model. Its policy functions as a selfregulating mechanism whereby business monitors

and ensures its active compliance with the spirit ofthe law ethical standards and international norms.


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ROLE OF BO RD

Select individuals for Board membership and evaluate theperformance of the Board, Board committees and individual

directors. Select, monitor, evaluate and compensate senior

management.

Assure that management succession planning is adequate.

Review and approve significant corporate actions.

Review and monitor implementation of managementsstrategic plans.

Review and approve the Companys annual operating plansand budgets.


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Monitor corporate performance and evaluate resultscompared to the strategic plans and other long-range goals.

Review the Companys financial controls and reportingsystems.

Review and approve the Companys financial statements andfinancial reporting.

Review the Companys ethical standards and legal

compliance programs and procedures.Oversee the Companys management of enterprise risk.

Monitor relations with shareholders, employees, and thecommunities in which the Company operates.


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DISCLOSURES

A. Basis of related party transactions:

A statement in summary form of transactions with related

parties shall be placed periodically before the audit committee.Details of material individual transactions with related partieswhich are not in the normal course of business shall be placedbefore the audit committee.

B. Disclosure of Accounting Treatment: where in thepreparation of financial statements, a treatment different from

that prescribed in an Accounting Standard has been followed,the fact shall be disclosed in the financial statements, togetherwith the managements explanation as to why it believes suchalternative treatment is more representative of the true and fairview of the underlying business transaction in the CorporateGovernance Report.


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C. Board Disclosure- Risk Management:the

company shall lay down procedures to inform Boardmembers about the risk assessment and minimizationprocedures.

D. Proceeds from public issues, rights issues ,preferential issues etc. :When money is raisedthrough an issue (public issues rights issues, preferentialissues etc.), it shall disclose to the Audit committee, theuses/ applications of funds by major category (capitalexpenditure,, sales and marketing, working capital, etc.),on a quarterly and annual basis.


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E. Remuneration of Directors :

All pecuniary relationship or transactions of the non-

executive directors vis--vis the company shall be disclosed inthe Annual Report.

Further, certain prescribed disclosures on the remunerationof directors shall be made in the section on the corporationgovernance of the Annual Report;

The company shall disclose the number of shares andconvertible instruments held by non-executive directors inthe annual report.


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INVESTOR PROTECTION

When investors finance firms, they typically obtain certain rights powers that are generally protected through the enforcement ofregulations and laws.

Some of these rights include disclosure and accounting rules, whiprovide investors with the information they need to exercise otherights. Protected shareholder rights include those to receivedividends on pro-rata terms, to vote for directors, to participate inshareholders' meetings, to subscribe to new issues of securities on

the same terms as the insiders, to sue directors or the majority fosuspected expropriation, to call extraordinary shareholders'meetings, etc. Laws protecting creditors largely deal with bankrupand reorganization procedures, and include measures that enablecreditors to repossess collateral, to protect their seniority, and tomake it harder for firms to seek court protection in reorganization


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TH NK YOU

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