BUSINESS ETHICS

GROUP 3
ROHIT PAUL (20630020138)
MAINAK SAHA (20630020031)
JANHAVI SALVI (20630020302)
PRIYANSHI SHARMA
(20630020324)
AND CORPORATE
SAUMYA NAHTA
(20630020316)
ANIKET PATIL (20630020245)
GOVERNANCE
 Corporate governance is the system of internal
controls and procedures by which individual
companies are managed.

WHAT IS
CORPORATE
It provides a framework that
GOVERNANCE
defines the rights roles, and responsibilities of
various groups—including management, the board,
controlling shareowners, and minority or
noncontrolling shareowners—within an organization
NEED FOR CORPORATE GOVERNANCE
WHY DO YOU
Lack of
THINK SO MANY
 Transparency
BIG CORPORATES
 Accountability
GOT INTO  Control
BUSINESS  Trusteeship
TROUBLES SINCE  Ethics
LATE 1990S
  Transparency : A company is required to transact their
ESSENTIAL business in a manner which is highly transparent, and their
books of accounts should reflect the same
FUNDAMENTAL  Accountability: Corporate Governance ensures the
S accountability of Board of Directors or senior management
to the various stake holders within and outside the company
  Control : To protect the interest of the shareholders the Apex
monitoring body for example, the governing bodies exercise
control over the management of company through various
ESSENTIAL compliances
 Trusteeship : Board of directors must act as the trustees of
FUNDAMENTAL the stakeholders and good Corporate Governance ensures the
S same
 Ethics: Good ethical practices are the foundation of any
successful corporate governance and ensures fairness in all
its activities
CORPORATE SCANDALS

Lehman
Enron Uber Volkswagen BP
Brothers

Valeant Satyam Apple Facebook Kobe Steel

Pharmaceuticals Computers

Equifax
GOVERNING BODIES

 India
 Ministry of Corporate Affairs (MCA)
 Securities and Exchange Board Of India (SEBI)
 State authorities
 USA
 U.S securities and exchange commission
 State and federal authorities
 Stressed balance sheets 

The composition of the Board 

ISSUES IN
CORPORATE Role of Independent Directors
GOVERNANCE
IN INDIA
The conflict between promoters and management

Executive Compensation 
 Public sector companies worked under government protection
without any accountability to public and minimal
responsibility for governance

Private sector adopted shortcuts to business operation for

ISSUES IN survival and success
CORPORATE
GOVERNANCE
IN INDIA Rise of corruption, nepotism and inefficiency

Violation of basic governance rules, compromising interests

of investors and customers
SEBI ACT 1992

Establishment of Securities and Exchange Board of India (SEBI) 1988

Liberal Economic Policy in 1991

 New investments
 Foreign investments
 Assurance of good corporate governance by Corporate India
 Need for Corporate Governance for India’s developing economy: bank based + market based

SEBI ACT 1992

Wide ranging powers of control to SEBI to insure
 Investor’s protection
 Corporate governance
  First institutional initiative in the Indian industry on
corporate governance
The Aim
 To promote and develop a code for companies, be in the
public sectors or private sectors, financial institutions or
banks, all the corporate entities.
 The steps taken by CII addressed public concerns regarding
CII-1996  Security of the interest and concern of investors, especially the
small investors
 The promotion and encouragement of transparency within
industry and business, the necessity to proceed towards
international standards of disclosure of information by corporate
bodies
 To build a high level of people’s confidence in business and
industry
 The issue of corporate governance for listed companies came
into prominence with the report of the Kumar Mangalam Birla
CLAUSE 49 Committee (2000) set up by SEBI to suggest inclusion of a
new clause, Clause 49 in the Listing Agreement to promote
good corporate governance
 Clause 49 of “Listing agreement” deals with the complete
guidelines for corporate governance.
ADDRESSING
NON Right of Shareholder: the company should seek to protect
and facilitate the exercise of right of shareholders. A
-TRANSPARENT company must always be transparent with its shareholders
GOVERNANCE
Role of stakeholders: A company must take care of
stakeholder’s right and encourage cooperation between
company & stakeholders.
 Disclosure & Transparency : It is the obligation on company to
ADDRESSING be transparent with its stakeholders by giving disclosures of all
material matters on timely basis
NON
-TRANSPARENT Responsibility of Board : Members of the Board should disclose
GOVERNANCE their interest in company and in any individual transaction and
contract. They should also maintain the rule of confidentiality.
  Satyam began facing problems from December the 16th,
2008. Its chairman Mr. Ramalinga Raju, in a surprise move
announced a $1.6 billion bid for two Maytas companies.
 He wanted to deploy the cash available for the benefit of
investors. Raju’s family promoted and controlled the two
companies.
SATYAM  The share prices plunged 55% voicing concern towards
Satyam’s poor corporate governance. They overturned the
SCANDAL decision in 12 hours.
 This resulted in the resignation of several independent
directors of the firm. Thus, this resulted in a further fall in
the share prices of Satyam.
  On 7th January 2009 B Ramalinga Raju, the founder of
Satyam Computer Services, confessed to a Rs 7,000-crore
 balance sheet fraud .
 He had hidden it from the IT company’s board, employees
SATYAM and auditors for several years.
SCANDAL  He revealed in his confession that his attempt to buy Maytas
companies was his last attempt to “fill fictitious assets with
real ones”.
INDIAN COMPANIES ACT (2013)

More power to shareholders

Appointment of at least one-woman Director on the board

E-Governance for various company processes 

Whistle blower mechanism

Prohibits Auditors from performing Non-Audit Services

 All the following information must be disclosed by the
companies in the registration statements made by the SEC

UNITED STATES  The financial and operating results of the company

CORPORATE  Major share ownership and voting rights

GOVERNANCE  Members of the board and key executives and renumeration

CODE  Governance structures and policies

 Financials- as per US GAAP

 Mandatory disclosure of non-financial information

  Auditor must be independent of the company and should not

have any business linkages or in an advisory position with

UNITED STATES company
CORPORATE  Audit committees to include at least three members and to
GOVERNANCE be comprised solely of Independent directors
CODE  At least one member of the audit committee to have

accounting or financial management expertise

REFERENCES

 https://www.ig.com/en/news-and-trade-ideas/top-10-biggest-corporate-scandals-and-how-they-affected-share-pr-1
81101
 https://www.oecd.org/daf/ca/Improving-Corporate-Governance-India.pdf
 https://corporatefinanceinstitute.com/resources/knowledge/other/top-accounting-scandals/
 https://www1.nseindia.com/getting_listed/content/clause_49.pdf
 https://taxguru.in/company-law/clause-49-corporate-governance-and-company-law-provisions.html
Thank You !!!