INTRODUCTION

Corporate governance is defined as the system by

which companies are directed and controlled. Corporate governance is a system by which companies are run, and the means by which they are responsive to their share holders, employees, and society.

Cont.
Corporate governance is concerned with holding the

balance between economic and social goal and between individual and communal goals. Corporate governance is a system by which companies are directed and controlled, board of director are responsible for governance of companies.

FEATURES OF CORPORATE GOVERNANCE

Represent the frame work under which business

decision are taken :- Corporate governance represent the value frame work, the ethical frame work and the moral framework under which business decisions are taken.

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Depends on the rules and practices: Good corporate

governance depends upon the rules and practices that govern the relationship between the manager and the share holder of corporation, as well as share holders likes employees, pensioners and local communities. It ensure transparency, fairness and accountability.

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Key part of the contract:- Good governance goes

beyond common sense. It is a key part of the contract that underpins economic growth in a market economy and public faith in that system, Assurance to well-Functioning of markets: The role of good corporate governance responsibility in helping to assure the well functioning market needed for economic growth and development cannot be taken for granted .

PRINCIPLES OF CORPORATE GOVERNANCE

PRINCIPLES

FAIRNESS

TRANSPERAN CY& DISCLOSURE

ACCOUNTABILI TY

RESPONSIBILIT Y

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FAIRNESS: it refers to the manner in which the business is

conducted without any determinant to the interest of the stake holder, shareholder , employees and the public as a whole. Business ethics play a vital role in his context. Transparency and disclosure:- it is disclosure, which is a tool of corporate governance. It ensure timely and accurate disclosure on all material matters . Transparency means accurate, adequate and timely disclosure to relevant information to stakeholder without transparency , it is impossible to make any progress towards good governance. A. Financial and operating result of company B. Company objective C. Members of boards D. Information regarding stake holder and employees

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Accountability:-

it is a monitoring managerial performance and achieving adequate return for the share holder by true and fair mean by the board of the director. It is also a responsibility to implement system designed to ensure that corporation obeys laws. It is acting a good faith with due diligence and care and it is the best interest of a company a nd its constituents.

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Responsibility:- Responsibility and the accountability

go hand in hand corporate is expected to be a responsible citizen and serve not only the interest of stakeholders but also in the best interest of the society .corporate governance reflect the large ethics prevailing in society

Issues in corporate governance principle

Oversight

preparation

of

the

company

financial

statement. Internal control and the independence company auditor. Review of the compensations arrangements of the chief executive officer and other senior executives The way in which individuals are nominated for the position on the board The resources are available to directors in carrying with out their duties Oversight and management of risk

BENEFITS OF CORPORATE GOVERNANCE

Creation and enhancement of corporation competitive

advantages :-competitive advantage grows naturally when a corporation or its services facilitates the creations of value for its buyer . Enabling corporation to perform efficiently by preventing fraud and malpractices:-the code of best conduct- policies and procedure governing the behavior of individuals of a corporations from part of corporate governances

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Providing protection to a share holder interest :-

corporate governance is a set of rules that focus on transparency of information and management accountability Enhance the valuation of an enterprises :- improved management accountability and operational transparency fulfill investors expectations and confident on management and corporation and in return increase the value of corporation

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Ensuring compliance of laws and regulations :- with

the development of capital market and the increasing investment by institutional share holder and individuals in corporations that are not controlled by particular shareholders jurisdictions around the world have been developing comprehensive regulatory frame work to protect the investors.

MECHANISM AND CONTROL OF CORPORATRE GOVERNANCE

Corporate governance mechanism and controlled is

designed to reduce the efficiency that arises from moral hazard and adverse selection. *Internal corporate governance controls *External corporate governance controls

Internal corporate governance controls

Monitoring by the board of directors :-the board of

directors ,with its legal authority to hire, fire compensate to top management safe guard invested capital. Regular board meeting allows potential problems to be identify, discusses and avoided Remunerations:- performance based remunerations is designed related to some portion of a salary to individual performance

External corporate governance controls

Government regulations Media pressure

Takeover
Demand for assessment of performance

information's Competition Managerial labor market Telephone tapping