CORPORATE GOVERNANCE

ASSIGNMENT

FAREEHA NAAZ
STUDENT ID: 13988
CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate social responsibility (CSR) is a self-regulating business model that helps a

company be socially accountable—to itself, its stakeholders, and the public. By
practicing corporate social responsibility, also called corporate citizenship, companies
can be conscious of the kind of impact they are having on all aspects of society, including
economic, social, and environmental.

To engage in CSR means that, in the ordinary course of business, a company is operating
in ways that enhance society and the environment, instead of contributing negatively to
them.

UNDERSTANDING CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate social responsibility is a broad concept that can take many forms depending on
the company and industry. Through CSR programs, philanthropy, and volunteer efforts,
businesses can benefit society while boosting their brands.

For a company to be socially responsible, it first needs to be accountable to itself and

its shareholders. Often, companies that adopt CSR programs have grown their business to
the point where they can give back to society. Thus, CSR is primarily a strategy of large
corporations. Also, the more visible and successful a corporation is, the more
responsibility it has to set standards of ethical behavior for its peers, competition, and
industry.

PTCL IN CORPORATE SOCIAL RESPONSIBILITY

Pakistan Telecommunication Company Limited (PTCL) has been an integral part of the
country’s infrastructure since its conception. PTCL is a socially responsible organization that has
been contributing to economic development of the country while improving the quality of life of
the workforce and their families as well as of the local community and society at large.

PTCL has been at forefront in relief efforts whenever the country has been struck by natural
disasters and calamities. The company is also providing free medical services through a wide
network of medical centers and mobile medical units to improve healthcare and wellbeing of not
only its employees but also the underprivileged people of the country. In addition to existing
Corporate Social Responsibility (CSR) activities, the organization continues to take proactive
measures in adding value to the society through several focus areas.

The CSR Policy at PTCL serves as a roadmap to help the company conduct business in an
economically, socially and environmentally sustainable manner that is transparent and ethical.
PTCL as a socially aware and responsible organization is determined to do its utmost efforts in
furthering worthy causes that contribute to the lives of individuals and help in improving the
standards of society as a whole.

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ROLE OF CORPORATIONS IN EDUCATION
Business and education are two vital but different streams that feed American culture. Typically,
business values and methods are more tangible - "product-oriented" - while education is
concerned with less concrete goals such as helping our young become good citizens. Today,
motivated by a need for an improved labor force, businesses are working with schools in ways
that can affect every aspect of the education process. And educators, prompted by increasing
conflicts between resources and goals, have been encouraging this involvement. So far,
business's participation has been relatively benign, but, judging from the wealth of literature on
the topic, its role in education needs careful assessment.

Schools are gaining much-needed pragmatic support as businesses come forward to donate or
loan equipment and supplies and share employees and executives to help with school
management. Industries and businesses are also opening their doors to help teachers upgrade or
develop new skills and learn about the labor market in their fields. The most widespread form of
business help still takes place in the classroom, where volunteers released from their jobs serve
as visiting tutors. On occasion, businesses invite students to come to them for learning.

Less tangibly, a greater sharing of ideas can take place among all sectors of the community.
Business leaders are often community leaders; an intimate acquaintance with day-to-day
teaching problems can help them provide more efficient support to school funding and policy
issues. Similarly, by learning more about careers and real-world applications of the skills they
encounter in school, students can make more informed choices about their futures.

WHAT DOEAS FUTURE LOOK LIKE?

Looking at 700,000-plus students dropping out each year, Mann sees little hope for "interim
solutions." Nor does he see business partnerships as "levers of reform." Typically, he finds,
businesses will relocate plants and purchase worker training programs more often than they will
work on school reform. In the face of mounting pressures to recapture or at least train school
dropouts, he, like Apple, has serious concerns about the development of an education-for-profit
trend.

Ironically, while many writers worry about damage to our basic democratic principles, those
same principles are often exercised vigorously as strongly motivated business leaders learn to
work with similarly dedicated educators. It should be noted that business has had an unfair edge
in that education has many publicly identified problems. A closer look at what business can do in
its own environment is needed.

For example, giving employees flexible schedules or even allowances for time off can help
parents become better involved in their children's activities. Similarly, affordable childcare at the
workplace could improve children's readiness for school as well as expose them to work roles.
Business leaders also need to look at the effects that lobbying to remove inventories from tax
rolls and sending jobs overseas have on graduates' employment hopes and motivations.

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THE CRITICAL ROLE OF BUSINESS IN HEALTH CARE
We believe that the business sector plays a critical role in many determinants of health. While the
health care system has primary responsibility for health care quality and access and, to some extent,
for health behaviors, it has more limited roles in the social and physical environments. The
business sector usually strives to maximize the value of health care dollars invested in the
workforce because lower costs or better outcomes generally translate to a healthier and more
productive workforce and a more successful enterprise. Business can also influence health care
through purchasing requirements. Such requirements can specify the health care product they are
purchasing and mandate that health care providers must practice evidence-based medicine. The
focus is primarily on controlling the cost of services provided to employees and their dependents
while ensuring an acceptable level of quality. Some larger employers also directly provide
employee health services. Health care benefit design impacts both health care costs and employee
recruitment and retention. The business case for focusing on health behaviors has been to foster
employee wellness, which is seen as improving productivity in the short run and reducing health
care costs in the long run. With respect to social and economic factors, the strongest business
contribution may be in employment itself, both in the employment-to-population ratio and the
contribution to individual and family income. There is also growing realization by employers that
K-12 and early childhood education programs in their communities contribute to business
profitability in the short and long runs. In terms of the physical environment, some industries have
substantial responsibility in areas of air and water quality and in community land use planning.
There also has been a growing interest in the environmental factors that contribute to obesity in
communities, for example, lack of opportunities for physical activity or for purchasing healthy
food.

IMPACT OF COMMUNITY HEALTH ON BUSINESS OBJECTIVES

Improving the health of communities and individuals is important to core business objectives.
While corporate social responsibility must be valued and encouraged, we believe the role of
business in communities’ health improvement efforts will be limited in impact and sustainability
if not tied to bottom-line performance. Better community health can contribute to the bottom line
in many ways beyond reducing health care costs. Cathy Baase, Dow Chemical’s Global Director
of Health Services, has identified the following benefits of business involvement: attracting and
retaining talent, employee engagement, human performance, personal safety, manufacturing and
service reliability, sustainability, and brand reputation. Also important is the link between
employee well-being and profitability. One large retailer regularly assesses employee well-being
and compares these data with sales and profitability figures. The business community understands
the health care and education connection. The poor health of our children will lead to rising health
care costs, which will then exhaust the resources for education. One approach to long-term
investments in youth development is through mentoring relationships. For example, one company
recruits youth (from as early as the first grade) who might otherwise end up on the street or in jail
to participate in supportive relationships and then guarantees jobs as long as the students earn good
grades. The business case for investing in education in the community is that the company needs
employees. Social responsibility commitments of businesses can often lead to enhanced company
reputation and customer loyalty.

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THE INTERRELATION BETWEEN CORPORATE GOVERNANCE AND
INVESTOR PROTECTION

A strong investor protection is associated with effective corporate governance. According to

Fernando AC when an investor invests his hard earned money in the securities of a corporate entity,
he has certain expectations of it performance of the organization and the corporate benefits that
would accrue to him and the prospects of capital growth of securities he holds in the organization.
Recent research has reflected that an essential feature of good corporate governance is strong
investor protection. According to Rafael La Porta, corporate governance may be referred as a set
of mechanisms through which the shareholders protect themselves against expropriation by
insiders. Hence, the Management of an organization is entrusted with the duty of protecting the
investors. There is a probability of a mismatch between the objectives of the shareholders and
investors. However, the shareholders may use the mechanism of corporate governance to ensure
that their interests are protected and the management of the organization does not indulge in abuse
of their power. Corporate Governance can thus be termed as an instrument in the hands of the
shareholders of a company to ensure checks and balances. Investor confidence can be achieved
only in the basis of the standards of transparency and fairness maintained by the company and the
organization’s willingness to implement effective corporate governance mechanisms. The core
substance of corporate governance lies in designing and putting in place the mechanism such as
Disclosure, Monitoring, Oversight and Corrective action. Investor Protection is crucial because
the expropriation of minority shareholders and creditors may take place at the hands of controlling
shareholders. The phenomenon of insider trading poses greater threats to the interests of the
shareholders.

The investor’s confidence shall be rebuilt based on better transparency in the organization, market
integrity and market efficiency, and undertaking measures to enhance investor protection.
Corporate Governance mechanism depends on the general legal, contractual and enforcement
processes in any jurisdiction and investor protection is directly affected by the quality of
enforcement environment. The Committee opined that a separate legislation was not essential for
the protection of investors and it was necessary to ensure safeguarding the interests of the investors
through proper articulation of corporate governance in such a manner that transparency and
accountability is ensured. It is also pertinent to examine the extent of relevance the Birla
Committee Recommendations placed on the importance of corporate governance and investor
protection in India. The Committee in its report observed that “the strong Corporate Governance
is indispensable to resilient and vibrant capital markets and is an important instrument of investor
protection. It is the blood that fills the veins of transparent corporate disclosure and high quality
accounting practices. It is the muscle that moves a viable and accessible financial reporting
structure.” It may thus be inferred that the aspect of protection of investors in terms of corporate
governance is indispensable. Hence, investor protection is essentially the reflection of strong
corporate governance practices in an organization.

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SHAREHOLDER’S RIGHTS UNDER THE COMPANY LAW

The Companies Act, 1956 had granted various rights to the shareholders. The following rights are
available to the shareholders:

1. Right to receive copies of the following documents from the company:

a. Abridged balance sheet and profit and loss account in the case of listed company
and balance sheet and profit and loss account of the company otherwise.
b. Report of the Cost Auditor, if so directed by the Government.
c. Contract for the appointment of managing director or manager.
d. Notices of the general meetings of the Company
2. Right to inspect statutory registers/returns and get copies thereof on the payment of
prescribed fee. The members have been given the right to inspect documents such as
Debenture Trust Deed, Register of charges, shareholder Minutes Book etc.
3. The members have a right to attend the meetings of the shareholders and exercise voting
rights of these meetings either personally or through proxy.
4. Apart from the aforementioned rights, the shareholders have the right to:
 Receive share certificates as title of their holdings.
 To transfer shares
 To resist and safeguard against increase in his liability without the written consent
 To have rights shares etc

CONCLUSION

In light of the discussion on Investor Protection and Corporate Governance, it may be reflected
that the Indian legal and regulatory framework of corporate governance is elaborative enough to
encompass the aspect of investor protection in listed companies. The Listing Agreement provides
an extensive set of disclosures that shall be mandatorily be made to the shareholders of the
Company. The Companies Act, 1956, Securities and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulations, 2009; SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 and SEBI (Prohibition of Insider Trading Regulations) 1992 which
was amended in 2002 also provide for various aspects that shall be disclosed to the shareholders
by the companies. The mandatory requirement of the Shareholders Grievance Committee has an
extremely significant role in safeguarding the shareholders and redressing their grievances on a
timely basis. Although the efficacy of the Shareholders Grievance Committee depends on the
members of the Committee and the perspective of the company with regard to corporate
governance, the mandatory provision of setting up of a Shareholder Grievance Committee has far
reaching implications in terms of safeguarding the interests of the investors.

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DOWNFALL OF PAKISTAN STEEL MILLS RELATED TO CORPORATE
GOVERNANCE
Pakistan Steel Mills is another model of how corruption and miss handling of vital national assets
were spoiled in recent times, with billions of Pakistan’s tax payers money was put into bonfire of
bailout packages. The latest example of misconduct in the country is miserable Petrol Crisis.
PSM was Pakistan’s biggest industrial production unit established back in 1985. The foundation
of these gigantic multi steel plants was laid at 40 Km southeast of Karachi on massive 18,200
acres. The land was proportionately divided for various activities, such as plants was developed
over 8,070 acres, 200 acres were assigned to setup water reservoir, which was the largest in Asia
and additional land was designated for storage of raw and various end products after
manufacturing.

Moreover, Pakistan Steel also employed considerable 28,000 people till 1991; the significant thing
is that steel mills required 14,000 only at the time. The production capacity was about 1.1 million
ton with the expansion scoop upto 3 million tons. The main dignitary behind PSM establishment
one was a Russian scientist known as Mikhail Koltokof, from native side involved skillful
and spirited Pakistani Professor Dr. Niaz Muhammad and Wahab Siddiqui.
Professor Dr. Niaz Muhammad was the main striving force behind execution of this dream, amid
at making Pakistan able to produce substantial amount of steel and iron products for coping up
with domestic needs and even producing surplus to export to other countries as well. Dr. Niaz
Muhammad was also the man behind training abundance employees of PSM including scientists
and engineers.

Golden Era:
Pakistan Steel Mills was a profitable well managed organization since its establishment, although
was bit overloaded with extra political recruitment of employees time to time. PSM even remained
a profitable unit in last Military ruler Pervaiz Musharraf’s regime mainly in years 2001 to 2008.

Collapse:
Nobody could imagine that this country’s largest industrial unit will ever become bankrupt and
won’t be able to even pay even its employees’ salaries. The worst time for PSM and its employees
started after PPP (Pakistan People’s Party) came into power in 2008. Although, Steel Mills was
starting deteriorating in Musharraf’s rule to be fair. Thus, because of overcrowding of useless
employees, incompetence of top management, week policies and most significant reason behind
PSM collapse was corruption of its top management and affiliated politicians and bureaucrats in
the past many years and affluently after 2008 till now.

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Privatization Attempts:
As from the first day of PSM establishments, many international countries mainly big steel players
of the World began dubious activities against this vital national asset operation. Many local
organizations and rich people were also found guilty in its bankruptcy. In 2006 while Pervaiz
Musharraf was still in command of the country, when the privatization of the Pakistan Steel Mills
took place abruptly by passing many rules and regulations.

Saudi Arabia-based Al Tawairqi Group of companies, Russian based Magnitogorsk Iron and Steel
Works and local hefty Arif Habib Securities paid nominal amount of Rs 21.6 billion ($362
million), or Rs 16.8 per share mutually. This deal authorized these big firms to take control of
Pakistan’s largest steel manufacturing plant.

Criticism on Privatization and termination:

The analysis and apprehensions was stated surfacing as soon as this PSM privatization deal tool
placed in 2006. Later, it was considered as the one of the biggest con and ruining of countries
biggest industrial unit by experts. Furthermore, Transparency International report, employees,
print and electronic media and even civil society also raised their voice against this fraudulent
agreement.

Consequence, of this protest against PSM privatization was witnessed soon, when on June, 23 nine
member bench of Supreme Court Pakistan found serious irregularities in the process and ruled this
privatization decision illogical and moved this case to Council of Common Interests. So, that’s
how this privatization deal got terminated later, in the profound interest of the country?

Bailout Packages:
The toughest time for Govt initiated when the mentioned privatization deal got terminated by the
apex court. Last, PPP (Pakistan People’s Party) led Govt fueled PSM with Rs 40 billion bailout
package in its 5 years term to keep it functioning. And now PML-N pilot federal Govt also recently
assigned 18.5 billion bailout packages for Pakistan Steel Mills for financial year 2014-15.

This huge amount was mainly used for paying remaining salaries of PSM employees and starting
some sort of manufacturing through purchasing raw material for PSM few operational plants.
Moreover, present is Govt also making efforts for boosting production capacity of PSM gradually
in the coming few months by this financial aid.

Current Situation:
The good news has now starting going off from Pakistan Steel Mills according to latest reports,
the production capacity of PSM has touched 45 % out of total capacity at present. This drastic
improvement has been seen ever since Govt appointed Major General (Retd) Zaheer Ahmed Khan
as CEO, who is in charge of PSM since April 7, 2014. The notable thing is that national steel mill
was working at 1.4 % of its total production capability – at the time Major Gen Zaheer took over.

Moreover, the authorities are also claiming that this vital national asset will soon become profitable
again in April, 2015 eyeing the present enhancement in its production capacity. This proves that if
right people having the will to evolve any sector deployed on right positions, no one can stop
Pakistan to progress towards its due place on World’s map.

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FAIR TRADE PRACTICES

Fair trade is an important movement, constantly developing and looking for new ways,
ideas, and models to come closer to sustainable world economy, community, stakeholders
and small producers to gain common benefits. It provides an important platform for the firms to
develop CSR and provides a convenient access of fair trade products to customers and generates
customer’s awareness. Fair trade permits a realistic set of improved trading conditions that allow
substantial volume to be traded against these improved conditions and it actually leads to an
increase in producer income. It develops code of conduct and standards that really come to the
reality of compliance, sustainable production and a better product with a better price. Fair trade
creates new ways in CSR to define better trading conditions that do not interfere with the market
and create a social framework which allow prices to tell the truth about social and environmental
production costs.

Fair Trade is taken to include the goals and challenges that are ambitious and straightforward.
According to Raynolds et al. (2007), fair trade has the following key goals:
Fair trade develops the security and sustenance of the producers by providing aassurance and
stability in trading association, good price, strengthening producerorganizations and market
access.
 Fair trade develops the security and sustenance of the producers by providing an assurance
and stability in trading association, good price, strengthening producer organizations and
market access.
 It is a trade which also promotes growth prospects for the women and deprived producers,
but on the other side, it defends child labor and promotes their rights.
 It is useful to situate a model of corporation in trade activities with the development
of discussion, precision and respect, because it protects human privileges and economic
security with the support of social fairness and sound environmental activities.
 Fair trade is a useful activity to create a trust between consumer and producer
internationally, and it brings new and fair ways of trade by creating the relationships
between consumers and producers.

WHAT IS UNFAIR TRADE PRACTICE?

Unfair trade practice refers to the use of various deceptive, fraudulent, or unethical methods to
obtain business. Unfair trade practices include misrepresentation, false advertising or
representation of a good or service, tied selling, false free prize or gift offers, deceptive pricing,
and noncompliance with manufacturing standards. Such acts are considered unlawful by statute
via Consumer Protection Law, which opens up recourse for consumers by way of compensatory
or punitive damages. An unfair trade practice is sometimes referred to as a “deceptive trade
practice” or an “unfair business practice.”

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UNDERSTANDING UNFAIR PRACTICES

Unfair trade practices are commonly seen in the purchase of goods and services by consumers,
tenancy, insurance claims and settlements, and debt collection. Most states’ unfair trade practices
statutes were originally enacted between the 1960s and 1970s. Since then many states have adopted
these laws to prevent unfair trade practices. Consumers who have been victimized should examine
the unfair trade practice statute in their state to determine whether they have a cause of action.

UNFAIR PRACTICES

An act is unfair when it meets the following criteria:

 It causes or is likely to cause substantial injury to consumers.

 It cannot be reasonably avoided by consumers.
 It is not outweighed by countervailing benefits to consumers or to the competition.

DECEPTIVE PRACTICES

An act or practice is deceptive when it meets the following criteria:

 A representation, omission, or practice misleads or is likely to mislead the consumer.

 A consumer’s interpretation of the representation, omission, or practice is considered
reasonable under the circumstances.
 The misleading representation, omission, or practice is material.

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