CORPORATE GOVERNANCE o responsibility, and

 Conceptual and legislative framework of o risk management.

corporate governance
 Benefits of Corporate Governance
 Principles of Corporate Governance
 4Ps of Corporate Governance
WHAT IS CORPORATE GOVERNANCE?
Corporate governance is the system of rules,
practices, and processes by which a firm is directed
and controlled.
Corporate governance essentially involves
balancing the interests of a company's many
stakeholders such as shareholders, senior
management executives, customers, suppliers,
financiers, the government, and the community
Since corporate governance provides the
framework for attaining a company's objectives, it
encompasses practically every sphere of
management, from action plans and internal
controls to performance measurement and
corporate disclosure.
TAKEAWAYS
Corporate governance is the structure of rules,
practices, and processes used to direct and
manage a company.
A company's board of directors is the primary
force influencing corporate governance.
Bad corporate governance can cast doubt on a
company's operations and its ultimate
profitability.
UNDERSTANDING CORPORATE GOVERNANCE
Communicating a firm's corporate governance
is a key component of community and investor
relations.
Most companies strive to have exceptional
corporate governance. For many shareholders,
it is not enough for a company merely to be
profitable. It also must demonstrate good
corporate citizenship through environmental
awareness, ethical behavior, and sound
corporate governance practices.
BENEFITS OF CORPORATE GOVERNANCE
Good corporate governance creates
transparent rules and controls, provides
guidance to leadership, and aligns the interests
of shareholders, directors, management, and
employees.
It helps build trust with investors, the
community, and public officials.
Corporate governance can provide investors
and stakeholders with a clear idea of a
company's direction and business integrity.
It promotes long term financial viability,
opportunity, and returns.
It can facilitate the raising of capital
Good corporate governance can translate to
rising share prices.
It can lessen the potential for financial loss,
waste, risks, and corruption.
It is a game plan for resilience and long-term
success.
PRINCIPLES OF CORPORATE GOVERNANCE

Corporate governance covers the areas of 1. Fairness

o environmental awareness, 2. Accountability
o ethical behavior, 3. Responsibility
o corporate strategy, 4. Risk Management
o compensation, and 5. Transparency
o risk management.
FARRT=Fairness, Accountability, Responsibility,
Risk Management, Transparency
REECS= Risk Management, Ethical behavior,
Environmental awareness, Compensation,
1. Fairness
Corporate Strategy
a. The board of directors must treat
shareholders, employees, vendors,
The basic principles of corporate
and communities fairly and with
governance are
equal consideration.
o accountability,
b. treatment or behavior without
o transparency, favoritism or discrimination.
o fairness,

2. Accountability
a. The board must explain the purpose
of a company's activities and the
results of its conduct.
b. It and company leadership are
accountable for the assessment of a
company's capacity, potential, and
performance
c. It must communicate issues of
importance to shareholders
Accountability is an assurance that an
individual or an organization will be evaluated
on their performance or behavior related to
something for which they are responsible. The
term is related to responsibility but seen more
from the perspective of oversight (supervision).
3. Responsibility
a. the state or fact of having a duty to
deal with something or of having
control over someone.
b. The board is responsible for the
oversight of corporate matters and
management activities
c. It must be aware of and support the
successful, ongoing performance of
the company
d. Part of its responsibility is to recruit
and hire a CEO It must act in the
best interests of a company and its
investors
Responsibility refers to the obligation to
perform the task or comply with the rule;
accountability implies answerability for the
outcome of the task or process.
4. Risk Management
a. the process of identifying,
assessing, and controlling threats to
an organization's capital and
earnings
b. The board and management must
determine risks of all kinds and how
best to control them
c. They must act on those
recommendations to manage them
d. They must inform all relevant parties
about the existence and status of
risks
e. 4Ts of risk management responses:
i. tolerate,
ii. terminate,
iii. treat and
iv. transfer.
5. Transparency
a. The board should provide timely,
accurate, and clear information
about such things as financial
performance, conflicts of interest,
and risks to shareholders and other
stakeholders
b. offering a clear, honest assessment
about what's going on within one's
work.
4PS OF CORPORATE GOVERNANCE
1. People
2. Process
3. Performance
4. Purpose
Pe Pro Per Pur
BOTTOM LINE
Corporate governance consists of the guiding
principles that a company puts in place to direct
all of its operations, from compensation, risk
management, and employee treatment to
reporting unfair practices, dealing with impact
on the climate, and more.
Corporate governance that calls for upstanding,
transparent company behavior leads a
company to make ethical decisions that benefit
all of its stakeholders. It can underscore a
potential investment for investors. Bad
corporate governance leads to a breakdown of
a company, often resulting in scandals and
bankruptcy.

THE BOARD
Effectiveness/Process and Members
 Board as the principal instrument of
Governance
 Board of Directors definition
 Board members
 Power of Board
 Board Responsibilities
 Functions of Board
 Tools Available to a Board
 Board committees
 Conclusion
BOARD AS THE PRINCIPAL INSTRUMENT OF
GOVERNANCE
 Shareholders own the company but don’t
run it
 Management run the company but does not
own it
 BOD lies between Share Holder and
Management
 Board of directors elected by shareholders
and board hire the management to run the
company
 They work as a bridge between these two
groups.
BOARD OF DIRECTORS DEFINITION
The Board of directors is the body of elected or
appointed members who jointly oversee the
activity of the company.
the governing body of a company, elected by
shareholders in the case of public companies to
set strategy and oversee management.
the primary job of a public company's board of
directors is to look out for the shareholders'
interests.
In fact, directors are legally required to put
shareholders' interests ahead of their own.
BOARD MEMBERS
Initial officers are elected by the board, typically
during a vote at the first meeting. Most
organizations start out with at least four officer
positions.
1. Chair or President
2. Vice Chair or Vice President
3. Secretary
4. Treasurer
1. Board Chair or President
a. The board chair oversees the work of
the board and the organization's senior
management team. The chair also
works closely with the executive director
or chief executive to make sure board
resolutions are carried out Additional
responsibilities include:
b. Appointing all committee chairs and
recommending committee members.
c. Assisting executive director or chief
executive in preparing agendas for
board meetings.
d. Coordinating executive director's or
chief executive's annual performance
evaluation.
e. Working with the governance or
nominating committee to recruit new
board members.
f. Serving as an alternate spokesperson
for the organization.
g. Assisting executive director or chief
executive in conducting new board
member orientation.
h. Helping board members assess their
performance.
2. Vice Chair or Vice President
a. The vice chair is also a vital part of the
leadership team. The vice chair carries
out special assignments as requested
by the chair and fills in for the board
chair if necessary.
3. Secretary
a. The secretary attends all board
meetings and is responsible for
maintaining complete and accurate
meeting minutes. The secretary is also
tasked with monitoring compliance with
the organization's bylaws.
4. Treasurer
a. The treasurer keeps track of the
organization's financial condition and
typically serves as the chair of the
finance committee. He or she must
understand financial accounting for
nonprofit organizations and work with
the executive director or chief executive
 to ensure that appropriate financial
reports are made available to the board
on a timely basis. The treasurer also
reviews the annual audit and answers
board member questions about the
audit.
POWER OF BOARD
The BOD of a company has absolute power
to conduct the affairs of the company.
The BOD draws its power from the following
sources:
o The company Constitution
o The Law
o Resolution Passed by Shareholder
BOARD RESPONSIBILITIES
1. Establish strategic plan and annual goals
and objectives
2. Determine association policy
3. Allocate resources through the budget
4. Monitor progress
5. Promote the organization
6. Oversee the executive director, attorney
and CPA
FUNCTIONS OF THE BOARD
The board of director of the company has three
main functions:
1. Oversight
2. Directional
3. Advisory
1. OVERSIGHT
a. Approving and monitoring company
strategic plan
b. Approving annual budgets and plans
c. Engaging external auditor and liaising
with them
d. Ensuring the integrity and reliability of
company annual reports
e. Review of major operational activities
2. DIRECTIONAL
a. Setting of the company mission
statement vision statement value
statement and formal code of conduct.
b. Appointment of CEO and other senior
executive of the company.
c. Planning for this secession of these
senior executives.
d. Appointing various committees like audit
committee executive committee and
remuneration committee.
3. ADVISORY
a. This refers to provision of general
guidance to the management keeping
them informed of what is happing in the
rest of the corporate world and offering
specialized help in certain areas.
TOOLS AVAILABLE TO A BOARD
1. Composition of the Board
2. Independence of the board
3. External help
4. Government Intervention
5. Committees
1. Composition of the board
a. If the individual directors are competent
person, they ensure the function of the
board are performed in a satisfactory
and professional manners.
b. In the other side if the directors are in
bulk, old country club guys or
unqualified persons they are not able to
meet up the challenges of an effective
board.
2. Independence of the Board
a. In order to perform effectively, a board
must be independent.
b. They should not be dependent on any
particular shareholders, stakeholders,
external party, investor, or organization.
c. They should be free to take the
decisions for common good of company.
3. External help
a. A board can seek assistance from
external experts to ensure that they are
able to take correct decisions.
b. For example: If board make the police
related to the renumeration of
employees, it is often deemed helpful to
use the service of external HR expert to
carry out a survey of salaries in the
particular industry and draft
recommendations in light-off.
4. Government Intervention
a. Board use governmental or society help
in conducting its affairs.
b. In some situation its necessary to chose
government help.
5. Committees
a. A board can from any number of
committees to ensure that due intention
is paid to the various matters that are
brought before it.
 b. A committee may comprise wholly of
directors, or it may have members from
outside the board is well.
c. A committee can examine a matter in
greater detail and come up with
summarized report for the consideration
of the board.
ESTABLISHING BOARD COMMITTEES
1. The board experience should be a positive one
2. The board is the caretaker of the organization
3. The board speaks as a whole, no board
member
4. should have more input or authority than others
5. Use business sense be respectful at all times
6. Realize you represent the organization
7. Always ask questions as they arise (due
8. diligence)

The board of directors accomplishes much

of its work through committees, which undertake
work delegated by the board, make
recommendations to the board for discussion and
action, and enhance board productivity.

Common standing committees include:

Governance committee
Finance and/or audit and risk committee
Executive committee

1. Governance Committee
a. ls known as the nominating committee,
this group recruits and orients new
board members and develops ongoing
educational opportunities for the entire
board.
2. Finance and/or Audit and risk Committee
a. This group reviews the organization's
accounting policies and internal financial
controls It also works with the
organization's audit firm, reviews the
auditor's reports, and makes the board
aware of key risks facing the charity and
the strategies for dealing with risks.
3. Executive Committee
a. This group is empowered to deal with
issues that arise between the full board
meetings It also formulates the agenda
for full board meetings.
b. Membership of the executive committee
is typically limited to board officers and
the executive director or chief executive

Other standing committees may include:

1. Fundraising
2. Investment
3. Personnel
4. Compensation
5. Marketing
6. Communications
7. Programs

CONCLUSION