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Case Study
ON
Satyam computer
(Corporate governance issues at
stayam computer)
Prepared by
BADRAKIYA ANKIT A.
(M.B.A. SEMESTER-4)
Academic Year:-2016-2017
Enrollment No: - 147590592008
SHREE H.N.SHUKLA COLLEGE OF MANAGEMENT
STUDIES,
RAJKOT (IN-Gujarat)
Submitted to: Gujarat Technological University
Under the Guidance of
[ASST.PROF.MEGHA JASANI]
SHREE H.N. SHUKLA COLLAGE OF MANAGEMENT STUDIES
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Abstract:
The case examines the corporate governance issues at the India
based IT services company, Satyam Computer Services Limited (Satyam).
In mid-December 2008, Satyam announced acquisition of two companies Maytas Properties and Maytas Infrastructure owned by the family
members of Satyam's founder and Chairman RamalingaRaju (Raju). Due
to adverse reaction from institutional investors and the stock markets, the
deal was withdrawn within 12 hours. Questions were raised on the
corporate governance practices of Satyam with analysts and investors
questioning the company's board on the reasons for giving consent for the
acquisition as it was a related party transaction.
After the deal was aborted, four of the prominent independent
directors resigned from the board of the company. In early January 2009,
Raju revealed that the revenue and profit figures of Satyam had been
inflated for past several years. The revelation further deepened concerns
about poor corporate governance practices at the company. The case
describes the corporate governance structure at Satyam, its code of
conduct, roles and responsibilities of different committees under the
board, whistle blower policy etc. It highlights the role played by the
independent directors of Satyam in approving the Maytas deal and
discusses their limitations.
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Issues:
Study the corporate governance structure that existed at Satyam
Computers.
Appreciate the importance of Code of Conduct and Whistleblower
policy of a company.
Examine the roles and responsibilities of a company's board and
independent directors.
Critically analyze the instances where the independent directors
failed to fulfill their responsibilities.
Understand the limitations of independent directors in Satyam's
case.
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CORPORATE GOVERNANCE
Corporate Governance is typically perceived as dealing with problems
thatresult from the separation of leadership & control.
Corporate Governance may be defined as holding a balance
betweeneconomic & social goals & between individual & commercial
goals.A good corporate governance is one where a firm commits &adopts
ethical practices across its entire value chain & in all of its dealing witha
wide group of stakeholders encompassing employee, customer, venders,
regulators & shareholders in both good and bad times
protecting
the
company,
its
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Transparency
Justifiability of the pay in the context of performance
The process adopted in determining it
Severance payments
Non-executive directors pensions
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of
all
accurate
and
of
timely,
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1)
2)
3)
4)
5)
Shareholders
Employees
Management
Bankers
Government
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CONCLSION
As earlier stated that corporate governance consist of four parties. In case
of satyam fraud, board is unable to fulfill its role & responsibilities.
Now we discuss the responsibilities that should be followed ethically by
board and what is actually did
Ethical responsibilities:
Governing the organization by establishing broad policies and
objectives
Selecting, appointing, supporting and reviewing the performance of
the chief executive
Ensuring the availability of adequate financial resources
Approving annual budgets
Accounting to the stakeholders for the organization's performance.
Actual scenario:
Despite the shareholders not being taken into confidence, the
directorswent ahead with the management's decision.
The government too is equally guilty in not having managed to
savethe shareholders, the employees and some clients of the
companyfrom losing heavily.
Simple manipulation of revenues and earnings
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The Sebi had in December given a clean chit to Satyam in the probe
onviolation of corporate governance law. The government has realized the
need of code of conduct & whistle blower policy, now we will discuss what
is these terms and how they played animportant role.
CODE OF CONDUCT:
This Code of Business Conduct covers a wide range of business practices
andprocedures. It does not cover every issue that may arise, but it sets
out basicprinciples to guide all employees and officers of the Company.
Those who violatethe standards in this Code will be subject to disciplinary
action,
Including possibledismissal Furthermore, violations of this Code may also
be violations of the lawand may result in civil or criminal penalties for you,
your supervisors and/or theCompany. The basic principles discussed in
this Code are subject to anyCompany policies covering the same issues:
Compliance with laws, rules, and regulations
Conflicts of interest
Corporate opportunities
Competition and fair dealing
Political contibutions
Discrimination and harassment
Health and safety
Confidentiality
Protection and power use of company asset
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BIBLIOGRAPHY
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