Presentation

CORPORATE
MANAGEMENT

CORPORATE GOVERNANCE
Introduction

 The last few years have seen some major scams and corporate
collapse across the globe.

 In India, the major example is Satyam which is one of the largest

IT companies in India.

 All these events have caused the pendulum of public faith to shift
away from free market to a more closely regulated one
Definition

• Corporate governance are the

policies, procedures and rules
governing the relationships between
the shareholders, directors and
managers in a company, as defined
by the applicable laws, the
corporate charter, the company’s
bylaws, and formal policies
Key members in CG

 Management

 Board of Directors

 Customers

 Shareholders

 Employees

 Regulators

 Suppliers
Principles in CG

 Rights and equitable treatment of shareholders

 Interests of other stakeholders

 Role and responsibilities of the board

 Integrity and ethical behaviour

 Disclosure and transparency

Objectives of CG

 Enhance the performance of companies

 Enhance access to capital

 Enhance long term prosperity

 Provide barrier to corrupt dealings

 Impacts on the society as awhole

CG in India

 The Indian corporate scenario was more or less stagnant tillthe early 90s.

 The position and goals of the Indian corporate sectorhas changed alot after
the liberalization of 90s.

 India’s economic reform programme made a steady progressin 1994.

 India with its 20million shareholders, is one of the largest

emergingmarkets in terms of the market capitalization.
Securities Exchange Board Of India

 On April 12, 1988, SEBIwas established with objective of

protecting the rights of small investors and regulating and
developing the stock markets in India.

 In 1992, the Bombay Stock Exchange (BSE),the leading stock

exchange in India, witnessed the first majorscam masterminded
by Harshad Mehta.
Securities Exchange Board Of India

 Analysts unanimously felt that if more powers had been given to

SEBI, the scam would not have happened.

 As a result the Government of India brought in a separate

legislation by the name of ‘SEBIAct 1992’and conferredstatutory
powers to it.

 Since then, SEBIhad introduced several stock market reforms.

These reforms significantly transformed the face of IndianStock
Markets
Satyam Scandal

 Overstated assets and income

 The results announced on October 17, 2009

overstated quarterly Revenues by percent and
profits by 97 percent.

 The global head of internal audit alsoillegally

obtained loans for the company.

 Created 13000 fake salary accounts

 Created fake customer identities and generated

fake invoices to inflate revenue
Satyam Scandal

 The CEOwas convinced that the gap in the balance sheets reachedan
unmanageable heights and could not befilled.
 Satyam Computer crashed by Rs139.15 or 77.69 per cent to closeat
Rs39.95, after the Chairman`sconfession
 Bombay stock exchange fell 700 points
 The Sensex recorded the biggest single-day loss in the past two
months, after Satyam Computers Services, plunged 80 percent.
Conclusion

 Corporate governance And economic development are

intrinsically linked.

 Effective corporate governance systems promote the

development of strong financialsystems

 Which, in turn, have an unmistakably positive effecton

economic growth and poverty reduction.
 THANK YOU

SUBMITTED TO:
ASST. PROF. PINKY ARORA

SUBMITTED BY:
VISHNU SHARMA