UNIT 2 CORPORATE GOVERNANCE

NATIONAL SUSTAINABLE DEVELOPMENT GOALS

CORPORATE GOVERNANCE

o Corporate or a Corporation is derived from the Latin term “corpus

o Governance is from ‘gubernate’
 Corporate Governance means a set of systems, procedures, policies, practices, standards put in place by a
corporate to ensure that relationship with various stakeholders is maintained in transparent and honest
manner.
 It describes “the framework of rules, relationships, systems and processes within and by which authority is
exercised and controlled within corporations.

“Corporate Governance is concerned with the way corporate entities are

governed, as distinct from the way business within those companies are
managed. Corporate governance addresses the issues facing Board of
Directors, such as the interaction with top management and relationships
with the owners and others interested in the affairs of the company” -
Robert Ian Tricker (who introduces corporate governance for the first
time in his book in 1984)

GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL CONTROL: Corporate Governance
FRAMEWORK FOR CORPORATE GOVERNANCE

PRINCIPLES OF CORPORATE EXCELLENCE

 Fairness to all stakeholders

 Mutual trust, transparency and togetherness
 Effective communication and continuous feedback
 Sharing knowledge, success and experience
 Sharing happiness and concerns
 Helping each other – round the clock

NEED FOR CORPORATE GOVERNANCE

Corporate Governance is needed

to create a corporate culture of
transparency, accountability and
disclosure.

GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL CONTROL: Corporate Governance
ELEMENTS AND SCOPE OF GOOD CORPORATE GOVERNANCE

 Role and power of boards

 Legislation
 Management environment
 Board Skills
 Board Appointment
 Board Independence
 Code of conduct
 Strategy setting
 Business and community obligations
 Financial and operational reporting
 Monitoring
 Audit
 Risk Management

IMPACTS OF GOOD GOVERNANCE

 Growth

 Widespread goodwill and brand reputation

 Enhanced trust and confidence of all the stakeholders

In a nutshell…

GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL CONTROL: Corporate Governance
RULES-BASED APPROACH TO CORPORATE GOVERNANCE

 Based on the view that companies must be required by law to comply with established of
principles of good governance

ADVANTAGES:

DISADVANTAGES:

PRINCIPLES-BASED APROACH TO CORPORATE GOVERNANCE

 based on the view that a single set of rules is inappropriate for every company
 circumstances and situations differs between companies

GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL CONTROL: Corporate Governance