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 OUTLINE
MECHANISMS AND CONTROLS
a

a

GOVERNANCE AND PERFORMANCE



   

BENEFITS OF GOODHISTORY
CORPORATE GOVERNANCE

IMPORTANT


 a ISSUES OF CORPORATE



aa GOVERNANCE  




 

WAYS
PARTIES
TO IMPROVE
TO CORPORATE
CORPORATE
GOVERNANCE
GOVERNANCE

PRINCIPLES
CURRENTOFSTATUS
CORPORATE GOVERNANCE
& CONCLUSION
 a

a
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 Ô
 
  

LEADERSHIP
LEADERSHIP
LEADERSHIP
LEADERSHIPWHICH
LEADING
WITH
FORIS
LEADERSHIP FOR
TO
TRANSPARENT
GOOD CORPORATE
AND
ACHIEVING OBJECTIVES
RESPONSIBILITY
EFFICIENCY
ACCOUNTABLE
CITIZENSHIP


   

CORPORATE GOVERNANCE IS THE SET OF

IT ALSO
PROCESSES,INVOLVES
IT SUGGESTS A CORPORATE
HOW
CUSTOMS, TO FRAMEWORK,
MONITOR
POLICIES, A
THE AND
LAWS,
CORPORATE STANDARD FOR PROJECT MANAGEMENT,
PERFORMANCE
INSTITUTIONSANDAFFECTING
IS CLOSELY LINKED
THE WAY A WITH
HOW TO ASSESS THE SUCCESS AND VALUE OF THOSE
POWER
CORPORATION
PROJECTS, AND
ANDIS ACCOUNTABILITY
DIRECTED,
ANALYZING ANDADMINISTERED
MITIGATING RISKOR
CONTROLLED
 HISTORY

INDIAN-
INTERNATIONAL-
SCENARIO
SCENARIO

Initial thrust for better corporate governance

FEWTHCOMPANIES
came OF U.K. ALSO WITNESSED
IN 19 inCENTURY
INDIA mainly
THE :-
NEED FOR A BETTER
Due SEVERAL
to 1992 CASES
stock OF CORPORATE
market scam,
CORPORATE GOVERNANCE WAS FELT WHEN-
CORRUPTION
Due to CORPORATION AND COLLAPSE.
the Onset of international
FEW GIANT IN U.S. COLLAPSED
IT LED TO
competition SETTING OF CADBURY(1996),
E.G. ENRON, WORLD COM,the
resulting from policy of
ADELPHIA
GREEBURY AND HAMPEL(1997)
liberalization COMMITTEE.
of economy in 1991.
Ô

Ô 

 

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IN THE ERA OF GLOBALIZATION, FOREIGN INVESTORS

MERGERS
INCREASING AND ACQUISITIONS
ACTIVE TAKING REPORTING
RATE OF INVESTIGATIVE PLACE AT
HAVE BECOME VERY CAREFUL ABOUT INVESTING THEIR
IN BUSINESS
A FAST JOURNALISM
PACE
MONEY
 PARTIES TO CORPORATE
GOVERNANCE
A BOARD
ALL PARTIESOTODIRECTORS
CORPORATEO TEN PLAYSHAVE
GOVERNANCE A KEYAN
ROLE IN CORPORATE
INTEREST, GOVERNANCE.
WHETHER DIRECT IT ISINTHEIR
OR INDIRECT, THE
EPARTIES
ECTIVEINVOLVED IN CORPORATE
PER ORMANCE
RESPONSIBILITY O ENDORSE
TO GOVERNANCE
THE ORGANIZATION.
THE
INCLUDE THE REGULATORY
ORGANISATION'S STRATEGY,BODY . OTHER
DEVELOP
STAKEHOLDERS WHO TAKE
DIRECTIONAL POLICY, PART INCLUDE
APPOINT, SUPPLIERS,
SUPERVISE AND
EMPLOYEES, CREDITORS, CUSTOMERS AND THE
REMUNERATE SENIOR EXECUTIVES AND TO
COMMUNITY AT LARGE.
ENSURE ACCOUNTABILITY
DIRECTORS, WORKERS AND O THE ORGANISATION
MANAGEMENT RECEIVE
TO ITSBENE
SALARIES, OWNERS ANDREPUTATION,
ITS AND AUTHORITIES. WHILE
SHAREHOLDERS RECEIVE CAPITAL RETURN. CUSTOMERS
RECEIVE GOODS AND SERVICES; SUPPLIERS RECEIVE
COMPENSATION OR THEIR GOODS OR SERVICES.
PRINCIPLES OF CORPORATE
GOVERNANCE

KEY ELEMENTS OF GOOD CORPORATE GOVERNANCE

PRINCIPLES INCLUDE HONESTY, TRUST AND INTEGRITY,
OPENNESS, PERFORMANCE ORIENTATION,
RESPONSIBILITY AND ACCOUNTABILITY, MUTUAL
RESPECT, AND COMMITMENT TO THE ORGANIZATION`
RIGHTS AND EQUITABLE TREATMENT OF
SHAREHOLDERS
ORGANIZATIONS SHOULD RESPECT THE RIGHTS OF
SHAREHOLDERS AND HELP SHAREHOLDERS TO
E ERCISE THOSE RIGHTS.

THEY CAN HELP SHAREHOLDERS E ERCISE THEIR

RIGHTS BY EFFECTIVELY COMMUNICATING
ORGANIZATIONS
INFORMATION THATSHOULD RECOGNIZEAND
IS UNDERSTANDABLE THAT
THEY HAVE LEGAL AND OTHER OBLIGATIONS
ACCESSIBLE.
TO ALL LEGITIMATE STAKEHOLDERS

INTERESTS OF OTHER STAKEHOLDERS

 ROLE AND RESPONSIBILITIES OF THE
BOARD

THE BOARD NEEDS A RANGE OF SKILLS AND

UNDERSTANDING TO BE ABLE TO DEAL WITH
VARIOUS BUSINESS ISSUES AND HAVE THE
ETHICAL AND
ABILITY TO RESPONSIBLE
REVIEW DECISION
AND CHALLENGE
MAKINGMANAGEMENT
IS NOT ONLY IMPORTANT FOR PUBLIC
PERFORMANCE.
RELATIONS, BUT IT IS ALSO A NECESSARY
ELEMENT IN RISK MANAGEMENT AND
AVOIDING LAWSUITS.

INTEGRITY AND ETHICAL BEHAVIOUR

DISCLOSURE AND TRANSPARENCY

ORGANIZATIONS SHOULD CLARIFY AND MAKE

PUBLICLY KNOWN THE ROLES AND
RESPONSIBILITIES OF BOARD AND
MANAGEMENT TO PROVIDE SHAREHOLDERS
WITH A LEVEL OF ACCOUNTABILITY.
 MECHANISMS AND CONTROLS

CORPORATE GOVERNANCE MECHANISMS AND CONTROLS

ARE DESIGNED TO REDUCE THE INEFFICIENCIES THAT
ARISE FROM MORAL HAZARD AND ADVERSE SELECTION.

AN IDEAL CONTROL SYSTEM SHOULD REGULATE BOTH

MOTIVATION AND ABILITY.
 INTERNAL CORPORATE
GOVERNANCE CONTROLS

E TERNAL CORPORATE
GOVERNANCE CONTROLS
 INTERNAL CORPORATE
GOVERNANCE CONTROLS
INTERNAL CORPORATE GOVERNANCE CONTROLS MONITOR
ACTIVITIES AND THEN TAKE CORRECTIVE ACTION TO
ACCOMPLISH ORGANISATIONAL GOALS
 MONITORING BY THE BOARD OF
DIRECTORS

E ECUTIVE DIRECTORS POSSESS SUPERIOR KNOWLEDGE OF

INTERNAL CONTROL
THE DECISION-MAKING PROCESS ANDPROCEDURES
THEREFORE EVALUATE
TOP MANAGEMENT ON THE BASIS OF THE QUALITY OF ITS
DECISIONS THAT LEAD TO FINANCIAL PERFORMANCE
OUTCOMES
INTERNAL CONTROL PROCEDURES ARE POLICIES IMPLEMENTED
BALANCE
BY THE BOARD OF POWER
OF DIRECTORS, AUDIT COMMITTEE,
MANAGEMENT, AND OTHER PERSONNEL TO PROVIDE
REASONABLE ASSURANCE OF THE ENTITY ACHIEVING ITS
OBJECTIVES
PERFORMANCE-BASED
THIS APPLICATION OF SEPARATION OF POWER IS
REMUNERATION
FURTHER DEVELOPED IN COMPANIES WHERE SEPARATE
DIVISIONS CHECK AND BALANCE EACH OTHER'S ACTIONS

PERFORMANCE-BASED REMUNERATION PROVIDE

MECHANISM FOR PREVENTING MISTAKES OR
OPPORTUNISTIC BEHAVIOUR
 E TERNAL CORPORATE
GOVERNANCE CONTROLS
E TERNAL CORPORATE GOVERNANCE CONTROLS
ENCOMPASS THE CONTROLS E TERNAL
STAKEHOLDERS E ERCISE OVER THE
ORGANISATION

ASSESSMENT
COMPETITIONOF
MANAGERIAL
GOVERNMENT
PERFORMANCE LABOUR
REGULATIONS
INFORMATION
MEDIA PRESSURE
MARKET
TAKEOVERS
 GOVERNANCE AND
PERFORMANCE

IT
GOOD
IMPROVES
GOVERNANCE
COMMUNICATION
HELPS IN AND
CREATING
BREAKS
A
GOOD
IT GOOD
CREATES
GOVERNANCE
GOVERNANCE
AN OPEN
ALLOWS
AND
LEADS
DECISION
TRANSPARENT
TO GOOD
MAKING
DOWN
BRAND IT REDUCES
SYSTEMATIC
AND CREATES
BASED RISK
BARRIERS
COMFORT
PERFORMANCE
SYSTEM
ON DATA
TO FOR
FLOWALL
OF
STAKEHOLDERS
INFORMATION
AND SOCIETY
 BENEFITS OF GOOD CORPORATE
GOVERNANCE

HAVING
REDUCED
HIGHERBETTER
FIRM
RISKVALUATION
OF
ACCESS
CORPORATE
TO
AND
E TERNAL
SHARE
CRISES
IMPROVED
SOCIO-ECONOMIC
STRENGTHENED
LOWER COMPANY
COSTS OF
DEVELOPMENT
PERFORMANCE
ECONOMY
CAPITAL
AND
PERFORMANCE
FINANCE
SCANDALS
I I

L I L , DI I
II L
B
I I D
IBILI
L Y
I
H H H LD
 WAYS TO IMPROVE CORPORATE
GOVERNANCE

AUDIT
SCHEDULE
NON-EREGULAR
ECUTIVES·
MEETINGS
PERFORMANCE
OF THE AND
NON-E
THAT
ECUTIVE
OF THE
DON·T AVOID RISK
BOARD BOARD
MEMBERS

BOARD MEMBERS
CORPORATE NEED TO DISCUSS
GOVERNANCE COLLECTIVELY AND IF
WEBSITES
THENON-E
ATTENDANCE
SHOULD
ECUTIVES RECORD
HAVE
NEED OFWOULD
A NOT
CORPORATE
NONE
BE RISK BE
E A LOTNEEDS
ECUTIVES
GOVERNANCE
PERTS, SIMPLER
BUTSECTION
IT
TOISBE
FRANKLY THEIR VIEWS ABOUT THE PERFORMANCE OF THE
COMPANIES
ESSENTIAL
DISCUSSED
CONTAINING
THAT
AND ANWERE
INFORMATION
THEY TOTALLY
APPRAISAL
UNDERSTAND
ABOUT
MADERISK
WHAT
THE AVERSE,
OFORGANIZATION
THE
THERANGE
COMPANY·S
OF
E ECUTIVES, THE STRATEGIC DIRECTION OF THE COMPANY AND
APPETITE
SPECIALIST
IF YOU
´YOU HAVE
FOR
HAVE SKILLS.
GLOBAL
RISK
TO IS³AND
THE
ACCEPTASPIRATIONS,
BOARD
ACCEPT,
RISKS. SHOULD
OR
AN REJECT,
THOSE ENGLISH-LANGUAGE
DISCUSS
WHO ANY
ANNUALLY
AVOIDRADICAL
THEM
WORRIES ABOUT AREAS WHERE THEY FEEL INADEQUATELY
HOW
VERSION
ARE TAKING WELLMUST
THE IT
SHIFTS
HAS
BEPERFORMED
BIGGESTAVAILABLE
RISK OF ALL.µ
BRIEFED

INITIATE A RISK-APPETITE REVIEW AMONG NON-

CORPORATE WEBSITES AND ANNUAL REPORTS
E ECUTIVES
 CURRENT STATUS ON CORPORATE GOVERNANCE
PRACTICES AS OF 2009-2010

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mm
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‰
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 m
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STRENGTHENING m  
m
THE MORAL FIBER
OF THE VALUE SYSTEMS ARE
CORPORATION HELPING BUILD CORPORATE
GOVERNANCE FRAMEWORK
FOR COMPANIES

BOARDS ARE REDEFINING

VALUE CREATION
‡ NOT MERELY INCREASE IN
STOCK PRICES
 Ô
Ô

Corporate governance is the net result
of 
  
the individual sense of values, the
    
values held in society or part of a
society like professional bodies or
   
business associations and finally the
system of public


governance. If those
 
who violate the norms are effectively
  
punished then there is a fear and there
will be adherence of the principles of
   
corporate governance