Riya Goyal # 14 Vicky Bajaj # 03 Paromita Gosh # 13 Ravi Purswani # 57 Karishma Parab # 33

INTRODUCTION is about running the If management

business, Governance is about seeing that it is run properly
Distinct characteristics:

Discipline Transparency Independence Accountability Responsibility Fairness Social Investment

Corporate governance which can be defined narrowly as the relationship of a company to its shareholders or, more broadly, as its relationship to society

OBJECTIVE

Better access to external finance Lower costs of capital Improved company performance Higher firm valuation and share performance Reduced risk of corporate crisis and scandals

PRINCIPLES OF CORPORATE GOVERNANCE

Rights

and equitable treatment of shareholders

of other stakeholders

Interests

Role

and responsibilities of the board

and ethical behavior

Integrity

Disclosure

and transparency

KEY ELEMENTS OF CORPORATE GOVERNANCE

Independence Separation

and Separation of Duties

of 'strategic planner' role from 'operator' role 'exit strategy' for company owners

An

Reliable
Key

systems and procedures

Performance Indicators

Credible

accounts

IMPORTANCE OF CORPORATE GOVERNANCE

Changing

Ownership Structure of Social Responsibility

Importance Growing

Number of Scams on the part of Shareholders

Indifference

Globalization Takeovers

and Mergers

ADVANTAGES

Management. Transparency. Benefits to Shareholders. Benefits to the National Economy.

DISADVANTAGES

Family-owned Companies. Costs of Monitoring. Illegal insider trading.

CORPORATE GOVERNANCE IN INDIA

India ranked as one of the top most countries in Corporate Governance in January 2003.

Independent Directors and Audit Committees. Reduced risk in corporate and financial malpractices.

PRIVATE SECTOR

3 board categories of shareholders, promoters and financial institutions. Majority rule voting system. Candour and forthrightness sacrificed at the altar of courtesy and politeness. No incentive to the Nominee Directors. Scattered and ill organised individual shareholders. React slowly to view opportunities.

PUBLIC SECTOR

Equity shares are owned wholly or substantially by government. Political and bureaucratic influence. Constrained by various regulations and administrative guidelines. Chief executives have short tenure. Weak manpower.

CURRENT SCENARIO
A survey by ET gave some results like

Value creation focus. Fair policies and actions. Communication. Effective governing board. Reliability.

Features

Anglo-American CG

German CG

Japanese CG

Indian CG

Corporate objectives

Shareholder value Long term corporate value

Long term corporate value

Shareholder value.

Government focus
Measures of success

Capital market

Corporate body

Business network Maximize surplus

Return on financial capital

Return on human capital

Return on social capital

Return on financial capital.

Decision making

Checks & balances b/w voice & exit options

Within the network of stakeholders including employees local community

Within the network includes business associates & banks as stakeholders

Management, outside stakeholders excluded.

Control of corporate

Separated from ownership

Linked with ownership

Linked with ownership.

Linked with ownership.

Features

Anglo-American CG

German CG

Japanese CG

Indian CG

Investor commitment

Low

High, important in difficult times

High, important in difficult times.

Low.

Goal of the board

To promote shareholder wealth Dynamic, market based, liquid capital, internalization, non-problematic

To promote long term organizational health. Long term industrial strategy, stable capital, strong overseas investment.

To promote long term organizational health.

Short term gains

Strength

Log term Recent govt. & industrial strategy, organizational stable capital. activism towards CG practices.

Weakness

Instability, short termism

Internationalizatio n difficult, vulnerable to

Secretive, corrupt practices, growth in institutional activism & financial speculation.

Lack of proper disclosure, secretive corrupt practices, instabilities.

CONCLUSION
Threat to future of every corporation. Adopt a set of principles & best practices. Builds corporate image & reputation.