Professional Documents
Culture Documents
7.models of Corporate Governance-I
7.models of Corporate Governance-I
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q This model is used as a basis of corporate
governance in USA, UK, Canada, Australia,
Newzealand and some other common wealth
countries.
q There is a separation of ownership and control in
this model.
q The board usually consists of executive directors
and few independent directors.
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q Thismodel depends upon effective communication
between shareholders, board and management
with regard to all important decisions taken after
getting approval of shareholders.
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1. Shareholders
2. Board of
Directors
3. Management
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q In this model management acts as agent of shareholders and
they are paid for this. This gives birth to the ‘agency cost’. Is
The cost of the separation of ownership and control is called
as agency costs.
q Interests of shareholders and management may not always
will become same.
q Share ownership Pattern in Anglo-Us Model: Tendency is
from individual shareholders to institutional shareholders.
Increasing influence if institutional shareholders.
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q Composition of Board of Directors in the Anglo-US
Model:
i. An insider[Executive Directors] &
ii. An outsiders[Non-executive
Directors/Independent Directors]
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qRegulatory Framework in Anglo-US model-
(i).Various countries have various laws to
regulate and define the relationships
amongst management, directors and
shareholders.
(ii).In USA-(a). The Securities Act, 1933, (ii).
The Securities Exchange Act, 1934.(iii).The
Sarbanes Oxley Act, 2002. (iv).Dodd-Frank
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Wall Street Reforms and Consumer Protection Act, 2010.(v).
Jumpstart Our Business Startups Act, 2012. In USA, the
federal agency, the securities and exchange commission(SEC),
regulates the securities industry establishes disclosure
requirements for corporations and shareholders.
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q Corporate Actions requiring shareholder approval
in the Anglo-US model.
q The Anglo-US model establishes a complex, well-
regulated system for communication and
interaction between shareholders and corporations.
q All registered shareholders receive the agenda for
the meeting by mail.
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