Presented by: Abdul Rahim Khan Mohammed Amaan Mirza Mohd. Kamil Ajaz Banday Mohd. Nasim Raza
Evolution
INTRODUCTION
It involves letting the investors know that how their money invested is utilized.
Some Definitions
Corporate Governance is the system by which companies are directed and controlled
Cadbury Report (UK), 1992
to do with Power and Accountability: who exercises power, on behalf of whom, how the exercise of power is controlled.
Sir Adrian Cadbury, in Reflections on Corporate Governance, Ernest Sykes Memorial Lecture, 1993
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
Corporate Governance
Objectives
To promote a healthy environment for long-term investment. To create a trust in the corporate and in its abilities. To promote business development. To improve the efficiency of the capital markets. To enhance the effectiveness in the service of the real economy.
There are three Benefits of Corporate Governance:To Companies. To Shareholders. To National Economy.
To Companies
Corporate Governance Principles can benefit the owners and managers of companies and increase transparency and disclosure by, Improving access to capital and financial markets. Help to survive in an increasingly competitive environment through mergers, acquisitions, partnerships and risk reduction through asset diversification. It leads to better system of internal control, thus leading to greater accountability and better profit margins. It has a ability to attract equity investors-nationally and from abroad. It also reduce the cost of loans/ credit for corporations. Investors and potential partners will have more confidence in investing in or expanding the companys operations.
To Shareholders
Provide the proper incentives for the board and management to pursue objectives that are in the interest of the company and shareholders as well as facilitate effective monitoring. Greater Security on their investments. It ensures that shareholders are sufficiently informed on decisions concerning amendments of statutes or articles in incorporation , sale of assets etc.,
To National Economy
Empirical evidence and research conducted in recent years supports the proposition that it pays to have good corporate Governance. It was found out that more than 84% of the global institutional investors are willing to pay a premium for the shares of well governed company over one considered poorly governed but with a comparable financial record. The adoption of Corporate Governance Principles as good Corporate Governance practice has already shown in other markets can also play a role in increasing the corporate value of companies.