BUSINESS ETHICS

Presentation on

CORPORATE GOVERNANCE
 Team Members

• Arpan Paul – 128

• Pratiyush kumar – 146
• Saurabh Aggarwal – 159
• Shruti Goel – 163
• Suruchi Sharma – 170
• Shafali Jain – 103
 Presentation Outline

• Concepts and Overview of Corporate

Governance

• Benefits of Corporate Governance

• Evolution of Corporate Governance in India

 Some Definitions

• “Corporate Governance is the system by which

companies are directed and controlled…”
--- Cadbury Report (UK), 1992

• “Corporate governance involves a set of relationships

between a company’s management, its board, its
shareholders and other stakeholders ..also the
structure through which objectives of the company
are set, and the means of attaining those objectives
and monitoring performance are determined.”
-- Preamble to the OECD Principles of CG ,
2004
 An Indian Definition

• “…fundamental objective of corporate

governance is the ‘enhancement of the long-
term shareholder value while at the same
time protecting the interests of other
stakeholders.”

– SEBI (Kumar Mangalam Birla) Report on Corporate

Governance, January, 2000
Purpose of corporate
Governance :
• CG answers the basic question in
economics , i.e. how do we allocate
scarce resources to the most effective
uses.
• Adam Smith talks about two kinds of
people what he calls principal’s,
people who have all the money ,more
money than idea’s then agents people
who have all the ideas , more ideas
than money people who undertake
activities.
 Contd….

• The purpose of CG and the purpose of

board of directors of a corporation is to be
intermediaries and to figure out how to
allocate ,how to best allocate the money, the
resources, the capital that belongs to the
principals to the best activities the activities
that will contribute to most value to the
society.
 Concepts

Corporate Governance is a set of systems,

processes and principles which ensure that a
company is governed in the best interest of all
stakeholders. It is the system by which
companies are directed and controlled. It is
about promoting corporate fairness,
transparency and accountability. In other
words, 'good corporate governance' is simply
'good business'
Corporate Governance Structure
It Ensures:
• Adequate disclosures and
effective decision making to
achieve corporate objectives.
• Transparency in business
transactions.
• Statutory and legal compliances;
• Protection of shareholder
interests.
• Commitment to values and ethical
conduct of business.
 Objectives

• A properly structured board capable of taking

independent and objective decisions is in
place at the helm of affairs

• The board is balance as regards the

representation of adequate number of non-
executive and independent directors who will
take care of their interests and well-being of
all the stakeholders;
 Contd…

• The board adopts transparent procedures and

practices and arrives at decisions on the strength of
adequate information;

• The board has an effective machinery to sub serve

the concerns of stakeholders;

• The board keeps the shareholders informed of

relevant developments impacting the company;
 Contd…

• The board effectively and regularly monitors

the functioning of the management team;

• The board remains in effective control of the

affairs of the company at all times.

• Its objective is to generate an environment of

trust and confidence amongst those having
competing and conflicting interests.
 The Benefits of Corporate
Governance
• It contributes not only to the efficiency of a
business enterprise, but also, to the growth
and progress of a country's economy.

• Corporations need to access global pools of

capital as well as attract and retain the best
human capital from various parts of the world
 Contd…

• Well governed companies mitigate ‘non-business’

risks .
• Increase efficiency of their activities and minimize
risks.
• Get an easier access to capital markets and decrease
the cost of capital;
• Increase growth rate;
• Attract strategic investors;
• Strengthen their reputation and raise the level of
investors and clients' trust.
 Regulators for Corporate
Governance
• Ministry of Corporate Affairs (MCA)
• Securities and Exchange Board of India (SEBI)
• The Institute of Chartered Accountant of India (ICAI)
• The Institute of Company Secretaries of India (ICSI)
• The Institute of Cost & Works Accountants Of India
(ICWAI)
Evolution of Corporate Governance
in India
In India, corporate governance initiatives
have been undertaken by the Ministry of of
Corporate Affairs (MCA) and the Securities and
Exchange Board of India (SEBI). The first
formal regulatory framework for listed
companies specifically for corporate
governance was established by the SEBI in
February 2000, following the
recommendations of Kumarmangalam Birla
Committee Report.
 Contd…
• In India, corporate governance initiatives have
been undertaken by the Ministry of of
Corporate Affairs (MCA) and the Securities and
Exchange Board of India (SEBI). The first
formal regulatory framework for listed
companies specifically for corporate
governance was established by the SEBI in
February 2000, following the
recommendations of Kumarmangalam Birla
Committee Report.
 Contd…
• February 2000: Clause 49 introduced pursuant
to KM Birla Report.

• The Ministry of Corporate Affairs had

appointed a Naresh Chandra Committee on
Corporate Audit and Governance in 2002 in
order to examine various corporate
governance issues.
 Contd…
• It made recommendations in two key aspects
of corporate governance: financial and non-
financial disclosures: and independent
auditing and board oversight of management.

• It is making all efforts to bring transparency in

the structure of corporate governance
through the enactment of Companies Act and
its amendments.
THANK YOU