Professional Documents
Culture Documents
Corporate Governance: Dr. Mridula Mishra
Corporate Governance: Dr. Mridula Mishra
Corporate Governance: Dr. Mridula Mishra
GOVERNANCE
Dr. MRIDULA
MISHRA
Corporate Governance is the
application of best management
practices, compliance of law in true
letter and spirit and adherence to
ethical standards for effective
management and distribution of wealth
and discharge of social responsibility
for sustainable development of all
stakeholders.
Dr. MRIDULA
Relationships among various participants in
determining the direction and performance of a
corporation.
Effective management of relationships among
Shareholders
Managers
Board of directors
Employees
Customers
Creditors
Suppliers
Community Dr. MRIDULA
MISHRA
Better access to external finance
Lower costs of capital interest rates
on loans
Improved company performance
sustainability
Higher firm valuation and share
performance
Reduced risk of corporate crisis and
scandals
Dr. MRIDULA
1. Sustainable development of all stake
holders
2. Effective management and distribution
of wealth
3. Discharge of social responsibility
4. Application of best management
practices
5. Compliance of law in letter & spirit
6. Adherence to ethical standards
Dr. MRIDULA
1. Sustainable development of all stake
holders -
To ensure growth of all individuals associated
with the enterprise on sustainable basis
2. Effective management and distribution of
wealth
to ensue that enterprise creates maximum
wealth and judiciously uses the wealth so
created for providing maximum benefits to all
stake holders and enhancing its wealth
creation capabilities to maintain sustainability
Dr. MRIDULA
3. Discharge of social responsibility- to ensure
that enterprise is acceptable to the society in
which it is functioning
4. Application of best management practices- to
ensure excellence in functioning of enterprise
and optimum creation of wealth on sustainable
basis
5. Compliance of law in letter & spirit- to ensure
value enhancement for all stakeholders
guaranteed by the law for maintaining socio-
economic balance
6. Adherence to ethical standards- to ensure
integrity, transparency, independence and
accountability in dealings with all stakeholders
Dr. MRIDULA
Accountability
Fairness
Transparency
Independence
Dr. MRIDULA
Ensure that management is
accountable to the Board
Dr. MRIDULA
Protect Shareholders rights
Dr. MRIDULA
Ensure timely, accurate disclosure
on all material matters, including
the financial situation, performance,
ownership and corporate governance
Dr. MRIDULA
Procedures and structures are in place so
as to minimize, or avoid completely
conflicts of interest
Dr. MRIDULA
Good Board Practices
Control Environment
Transparent Disclosure
Board Commitment
Dr. MRIDULA
Clearly defined roles and authorities
Duties and responsibilities of Directors
Board is well structured
Appropriate composition and mix of skills
Appropriate Board procedures
Director Remuneration in line with best practice
Board self-evaluation and training conducted
Dr. MRIDULA
Internal control Independent external
procedures auditor conducts audits
Risk management Independent audit
framework present committee established
Web-based disclosure
Dr. MRIDULA
Minority shareholder rights formalized
Dr. MRIDULA
The Indian corporate scenario was more or
less stagnant till the early 90s.
Dr. MRIDULA
In 1996, Confederation of Indian Industry (CII), took a
special initiative on Corporate Governance.
Dr. MRIDULA
The Government of India's securities watchdog, the
Securities Board of India, announced strict corporate
governance norms for publicly listed companies in India.
Dr. MRIDULA
On April 12, 1988, the SEBI was established with a dual
objective of protecting the rights of small investors and
regulating and developing the stock markets in India.
In 1992, the BSE, the leading stock exchange in India,
witnessed the first major scam masterminded by Harshad
Mehta.
Analysts felt that if more powers had been given to SEBI,
the scam would not have happened.
As a result the GoI brought in a separate legislation by
the name of SEBI Act 1992and conferred statutory
powers to it.
Since then, SEBI had introduced several stock market
reforms. These reforms significantly transformed the face
of Indian Stock Markets
Dr. MRIDULA
SEBI asked Indian firms above a certain
size to implement Clause 49, a regulation
that strengthens the role of independent
directors serving on corporate boards.
Dr. MRIDULA
Independent Directors
Non-Executive Directors
Board of Directors
Audit Committee
Whistleblower policies
Subsidiary Companies
Dr. MRIDULA
Independent Directors:- 1/3 to depending
whether the chairman of the board is a non-
executive or executive position.
Dr. MRIDULA
Audit Committee:- Financial statements and the draft audit report of
management discussion and analysis of
Financial condition
Result of operations of compliance with laws
Risk management letters
Letters of weaknesses in internal controls issued by statutory
Internal auditors
Removal and terms of remuneration of the chief internal auditor
Dr. MRIDULA
As Indian companies compete globally for access to
capital markets, many are finding that the ability to
benchmark against world-class organizations is
essential.
Dr. MRIDULA
Corporate governance is the system of rules,
practices and processes by which a company is
directed and controlled.
Corporate governance essentially involves
balancing the interests of a company's many
stakeholders, such as shareholders, management,
customers, suppliers, financiers, government and
the community.
Corporate Governance is concerned with
holding the balance between economic and
social goals and between individual and
communal goals.
The corporate governance framework is there
to encourage the efficient use of resources and
equally to require accountability for the
stewardship of those resources.
The aim is to align as nearly as possible the
interests of individuals, corporations and
society.
Corporate Social Responsibility (CSR) is a
business approach that contributes to
sustainable development by delivering
economic, social and environmental
benefits for all stakeholders.
EMPLOYEES MORE
THAN 50,000 PEOPLE
IN INDIA
HIGH GLOBAL
REPUTATION
OFFERS SERVICES
TO MORE THAN 550
MNCs
What was Scam all about
The companys balance sheet was inflated to Rs.
5,361 Cr at the end of September 2008 against the actual
Rs 5,040 Cr.
No perfect score
Clean up