Corporate Governance

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Presentation Transcript

Slide 2: 

R O L E O F P R O F E S S I O N A L IN IN IN IN C O R P O R A T E G O V E R N A N C E

INTRODUCTION : 

INTRODUCTION Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. A Professional body is a group of people in a learned occupation who are entrusted with maintaining control or oversight of the legitimate practice of the occupation. Professional involved in corporate governance includes the regulatory body (e.g. the Chief Executive Officer, the board of directors, management, shareholders and Auditors). Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large.

History of Corporate Governance : 

History of Corporate Governance Kautilya’s governance, the concept of governance cannot be completed without acknowledging the contribution of the most celebrated scholar of ancient India, Kautilya. One of the world’s most complete manuscripts on the science of governance was penned by Kautilya in the third century BC. Kautilya’s discussions on administration and management are strikingly modern and scientific covering almost all facets of governance. In the 19th century, state corporation laws enhanced the rights of corporate boards to govern without unanimous consent of shareholders in exchange for statutory benefits like appraisal rights, to make corporate governance more efficient.

Efficiency, effectiveness and is sustainable in performance at large Accountability Integrity, probity and transparency Recognition and protection of stakeholder rights An inclusive approach based on democratic ideals, legitimate representation and participation Normal and ethical corporate social behaviour The crux of the good corporate governance seeks to promote

Impact & Principles of Corporate Governance : 

Impact & Principles of Corporate Governance The positive effect of corporate governance on different stakeholders ultimately is a strengthened economy, and hence good corporate governance is a tool for socio-economic development. Key elements of good corporate governance principles include Honesty, Trust And Integrity, Openness, Performance Orientation, Responsibility And Accountability, Mutual Respect, And Commitment to the organization. Commonly accepted principles of corporate governance include;

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Rights and equitable treatment of shareholders Interests of other stakeholders Role and responsibilities of the board Integrity and ethical behaviour

Mechanisms and Controls : 

Mechanisms and Controls Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. For example, to monitor managers' behaviour, an independent third party (the external auditor) attests the accuracy of information provided by management to investors. An ideal control system should regulate both motivation and ability.

Internal Corporate Governance controls : 

Internal Corporate Governance controls Monitoring by the board of directors Internal control procedures and internal auditors Balance of power Remuneration

External Corporate Governance Controls : 

External Corporate Governance Controls Competition Debt covenants Government regulations Managerial labour market Media pressure Takeovers

Role of professionals : 

Role of professionals A company secretary is often call the conscience of the company so professional bodies must be the conscience of the regulators and to a certain extent society in their areas of expertise – whether these are financial, construction, environmental fields or other areas. Only professional bodies acting with their greatest asset “integrity” as their foundation stone can perform such a role. In Corporate Governance, Role of professionals is as follows, Normally, Role of professionals can be two types; (1)   Direct involvement in corporate governance as a member of the board of directors / various committees of the board / Holding the position of a CFO / CEO / Compliance Officer of the company. (2)   As a reviewer of the functioning of the company, its board and committees as a part of the certification relating to corporate governance.

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R O L E O F P R O F E S S I O N A L

EXAMPLE : 

EXAMPLE Satyam scandal: Showed corporate governance can be Skin-deep It was dubbed “India’s Enron.” The Rs7,000 crore fraud (it is now over Rs10000crore and rising), the biggest in India’s history, wiped off $2 billion worth shareholders wealth in the week that followed Ramaling Raju’s “riding a tiger not knowing how to get off without being eaten”. It exposed glaring shortcomings of corporate governance, threatening India’s appeal to foreign investors. “This is a lesson for corporate houses. In the new companies Act, we propose to give more powers to independent directors.

Conclusion : 

Conclusion At last I concluded my presentation, an independent professional reviewing the compliance relating to corporate governance should report the fact of any non-compliance as this would only pave way to good corporate governance and help the organization in reaping the fruits of ensuring high ethical standards in governance in the long run.

THANK YOU!!! : 

THANK YOU!!! ANY QURIES, WELCOME

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