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Corporate Governance

What is Corporate Governance?

Corporate Governance hinges on total transparency, integrity and accountability of the management.

It is an important tool for shareholders protection and maximization of long-term values.

Corporate Governance focuses on the internal structure and rules of the board of directors; the rules for disclosure of information to shareholders; and control of the management.

Corporate Governance therefore calls for three factors:

Transparency in decision making Accountability which follows from transparency (responsibilities are thus fixed for actions taken or not taken) All this for the sake of safeguarding the interests of the stakeholders and investors.

Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. It is a system by which companies run, and the means by which they are responsive to their shareholders, employees, and society. Corporate Governance is also concerned with the ethics, values and morals of a company and its directors.

Even in a competitive environment, the expectations all around are of fair play and effort to excel by ethical means. Corporate Governance caters to this need.

Benefits of Corporate Governance

Ensures corporate success and economic growth Helps maintain investors confidence, as a result of which companies can raise capital efficiently & effectively. Positive impact on share price Minimizes wastage, corruption, risks & mismanagement Helps in brand formation

Corporate Reporting
Financial performance (financial statements) Corporate Governance (process by which a company is directed/ controlled) Executive remuneration (how-on what basis) Corporate Responsibility (impact on people, clients, society) Narrative areas (market position, strategy, future prospects etc.)

According to C.G. Committees of various countries, there has to be a section on Corporate Governance in the annual reports of a company.

According to SEBI (Securities and Exchange board of India), the lists to be mentioned in C.G. report are:

A statement on the companys philosophy/motto on code of governance Board of Directors (composition/BoD meetings) Audit Committee (Composition/Meetings/Attendance) Remuneration Committee (policies/names of members/salary of all directors)

Shareholder Committee (name of person in charge/ no. of shareholders complaints received-solved/not) General Body Meetings (Location/time/voting pattern)

Disclosures (transactions-with promoters,management/ conflicts/penalties)

Means of Communication (newspapers/websites/reports sent to shareholders) General Shareholder Information (Mkt. price data/plant location etc)

The matter published in Corporate Governance Report differs from country to country. But the general motive behind such reporting is common.

To increase the transparency in the various activities and transactions of a company.