The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources.
The aim is to align as nearly as possible the interests of individuals, corporations and society
Cont..
The primary purpose of corporate governance is to create wealth legally and ethically. This translates to bringing a high level of satisfaction to five constituencies -- customers, employees, investors, vendors and the societyat-large. The raison d'tre of every corporate body is to ensure predictability, sustainability and profitability of revenues year after year. - N R Narayana Murthy
Principle 3: Disclosure
To ensure transparency, companies annual reports should disclose true and fair accounting information prepared in accordance with applicable standards; consider substance over form in the presentation of accounts; disclose and discuss all material risks.
There is an inextricable relationship among the objectives of corporate performance, social development, and environmental protection. Enterprises, to be sustainable, will need to recognize and effectively deal with this triad of concerns, which, at times, may conflict with each other.
Mechanism of control
Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. For example, to monitor managers' behavior, an independent third party (the external auditor) attests the accuracy of information provided by management to investors. An ideal control system should regulate both motivation and ability
1. 2. 3. 4. 5. 6.
Board of Directors
Use of corporate property. Transaction with Company. Conflict of duties and interest. Proper purpose. Classification
Management
Basic function of management. Formation of the business policy. How to implement policies and strategy. Where policies and strategies fit in the planning process. Areas and categories and implementation of management. Multi divisional management hierarchy.
Share holders
The right to propose shareholder resolution. The right to share in distributions of the company's income. The right to purchase new shares issued by the company. The right to a company's assets during, a liquidation of the company.
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Achievements
Voted as the Best Managed Company in Asia. Biggest exporters of Software. First to follow the US Generally Accepted Accounting Principles before going for Nasdaq listing in 1991.
2)
Moving up the Value Chain Getting involved in a software development project at the earliest stage of its life cycle.
PSPD Model Predictability of Revenues, Sustainability of Revenues, Profitability, Demaking and risk taking
3)
ETHICS-definitions
The word ethics is derived from the Greek word ethos meaning character and latin word mores meaning customs To better understand ethics let us understand and contrast the definition of ethics and law
Law is a consistent set of universal rules that are widely published, generally accepted and usually enforced. These rules describe the ways in which people are required to act in society. Ethics defines what is good for the individual and for society and establishes the nature of duties that people owe to oneself and others in society
Purpose of ethics
Ethics are the guiding principles. Where the proposed business activity/ operation of the company borders on the unknown, the company needs to apply the ethics principle to decide on the project. Ethics help make relationships mutually pleasant and productive- imbibes a sense of community among members- a sense of belongingness to society.
laws
Law is a consistent set of universal rules that are widely published, generally accepted and usually enforced. These rules describe the ways in which people are required to act in society.
Concluding remarks
By and large, Indian listed companies have been legally mandated to follow fairly strict standards of corporate governance and disclosure Comparisons will show that the standards are far stronger than all Asian countries, and in general stronger than most OECD countries Indian corporate sector regulators and companies have been quick to incorporate some of the best international corporate governance and disclosure practices The need of the day is more training of directors, audit committee members and senior executives of companies The challenge is to design and sustain a system that imbibes the spirit of corporate governance and not merely the letter of the law
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