Corporate Governance

Reason for the birth of CG – In response to Corporate failures and

dissatisfaction with the way many corporates function.
Meaning : Narrow Sense : It is a formal system of accountability of
senior management to the shareholders.
Wider Sense : CG includes the structure, process, cultures and systems
that helps in the successful operation of the organisation.

Corporate Management – is concerned with the efficiency of the

resource use, value addition and wealth creation within the broad
parameters of the corporate philosophy established by CG.
Corporate Governance : is concerned with the values, vision and
visibility. It is about the value orientation of the organisation, ethical
norms for its performance, the direction of development and social
accomplishment of the organisation and the visibility of its performance
and practices.
Characteristics of Corporate Governance –
- balance between economic & social goals
- balance between individual & communal goals.
- to direct, monitor and lead corporations.
- transparency – openness, integrity and accountability
- efficient use of resources
- to strengthen the economy and discourage fraud and
mismanagement
- greater focus on investor protection and public interest.
- According to the Kumar Mangalam Birla Committee, the
fundamental objective of CG is the “enhancement of long-
term shareholder value while, at the same time, protecting
the interests of other stakeholders.
- for the effective organisation of the corporate.
Why CG – Due to mismanagement in corporate sectors-
misutilisation of funds, poor investor’s grievances system,
delay in issue of share certificates, delay in transfer of
shares, lack of information to investors, etc.
SEBI – Kumar Mangalam Birla Comittee
Prerequisites for good CG :
1. A proper system consisting of clearly defined and
adequate structure of roles, authority and responsibility
2. Vision, principles and norms which indicate development
path, guidelines and norms for performance.
3. A proper system for guiding, monitoring, reporting and
control.
4. Govt. interventions for Fairness, Transparency,
Accountability and Responsibility.