CORPORATE GOVERNANCE Corporate Governance

Transcript:CORPORATE GOVERNANCE Corporate Governance:
CORPORATE GOVERNANCE 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 shareholder desires ( maximising wealth) while confirming to the basic rules of the society embodied in the law and local customs. Corporate Governance Relationship 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 Why corporate Governance? Better access to external finance Lower costs of capital – interest rate on loans Improved company performance sustainability Higher firm valuation and share performance Reduced risk of corporate crisis and scandals Principals of Corporate Governance Sustainable development of al 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 benefits to all stake holders and enhancing its wealth creations capabilities to maintain sustainability. 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 stakeholder guaranteed by the low of maintaining socio –economic balance. Adherence to ethical standard- to ensure integrity, transparency, independence and accountability with all stakeholders. Four Pillars of Corporate Governance Accountability Fairness Transparency Independence Accountability Ensure that management is accountable to the Board Ensure that the Board is accountable to shareholders Fairness Protect Shareholders rights Treat all shareholders including Minorities, equitably Provide effective redress for for violations Transparency Ensure timely, accurate disclosure on all material matters, including the financial situation, performance, ownership and corporate governance. Independence Procedures and structures are in place so as to minimize , or avoid completely of interest. Independent Directors and Advisers i.e. free from the influence of others Elements of corporate Governance Good Board practices Control Environment Transparent disclosure Well-defined shareholder right Board commitment Good Board Practices Clearly defined roles and authorities Duties and responsibilities of Directors understood Board is well structured Appropriate composition and mix of skills Good Board