1st slide: Putting Governance Into Practice
actions aimed at reaching creative contribution to the board by
As a start we need to consider the ways
corporate governance can be made to
work in practice.
2nd slide: 10 principia of effective
corporate governance
Andrew Chambers (who is he and what
does he do)
book on corporate governance provides a
simple list of what he calls the ten
‘principia’ of effective corporate
governance as follows:
 Stakeholder control of the
business.
 Maximum and reliable public
reporting.
 Avoidance of excessive power at
the top of the business.
 A balanced board composition.
 A strong involved board of
directors.
 A strong, independent element
on the board.
 Effective monitoring of
management by the board.
 Competence and commitment.
 Risk assessment and control.
 A strong audit presence.
3rd slide: definition of the board
The IIA has provided a definition of the
board:
“ A board of directors, audit committee of
such boards, heads of an agency or
legislative body to whom internal auditors
report , board of governors or trustees of
a non-profit organization, or any other
designated governing bodies of
organizations.”
The board is responsible for reporting on
their corporate governance arrangements.
4th slide: Key areas
The UK’s Institute of Directors (IoD) has
produced standards and guidelines for
boards and directors and suggest that the
boards should focus on four key areas:
 Establishing a vision, mission, &
values- A Mission statement
defines the company’s business,
its objective and its approach to
reach those objectives; A Vision
statement describes the desired
future position of the company.
Elements of the company’s
mission and vision are combined
often to provide a statement of
the company’s values.
 Setting strategy and structure-
for the organization to deliver its
plans, the setting of
organizational strategy and
structure must be woven
together seamlessly. They are
independent elements in
business but are somewhat co-
dependent.
Setting strategy is to plan
specific goals and staying good
stead with the clients and
vendors. Setting structure on
the other hand is to put pieces
of the organization fit together
internally
 Delegating to management-
Delegation or empowering the
management the responsibility
and authority to complete tasks
at hand though the boards
retain the overall responsibility
for its success
 Exercising accountability to
shareholders and being relevant
to shareholders- Exercising
accountability and being
relevant to shareholders ensures
actions and decisions taken by
the boards and directors are
subject to oversight so as to
guarantee that initiatives meet
their stated objectives and
respond to the needs of the
company
5th slide: definition of the directors
If the board is responsible for reporting on
their corporate governance arrangements
The Directors on the other hand are
responsible for making sure the company
fulfils its statutory duties. The main duty
of a director is the preparation of the
accounts and reports. Directors are
expected to display a certain amount of
skill and exercise reasonable care in the
performance of their work. In certain
circumstances directors can be
disqualified for wrongful trading (when
insolvent) and fraudulent trading
(defrauding the creditors).
6th slide: Responsibilities of individual
company directors
While the responsibilities of individual
company directors have been
documented by the Institute of Directors:
 Determining the company’s
strategic objectives
 Monitoring progress towards
achieving the objectives and
policies
 Appointing senior management
 Accounting for the company’s
activities to relevant parties
7th slide: Non-executive director & its Role
There is no legal distinction between
executive and non executive directors.
NED’s align with the internal auditor,
appraise the corporate strategy and
ensure that enterprise-wide risk
management is effectively imbedded
within all parts of the organization. And at
the same time be independent of the
executive board members and protect the
interests of all major stakeholders.
Essentially the NED’s role is to provide a
providing objective criticism. They bring to
the board: Independence, impartiality,
wide experience, special knowledge,
personal qualities
The non-executive director represents the
key to the future of corporate
accountability. The demands of the NED
role call for courage, integrity, common
sense, good judgement, tenacity and to
communicate with clarity, objectivity and
brevity, business acumen, numeracy and
the ability to gain an adequate
understanding of the company’s finance.
8th slide: Responsibilities of Non executive
director:
 Practices Communication by
using outside contacts and
opinions
 Formulates Strategic direction
with a clearer and wider
perspective
 Monitors Performance of
Executive Management
 Ensures reliable Audit - it is the
duty of the whole board to
ensure that the company
accounts properly to its
shareholders by presenting a
true and fair reflection of its
actions and financial
performance and that the
necessary internal control
systems are put in place and
monitored regularly
 Remuneration of executive
directors
 Appointing directors
The contribution of NEDs can help raise
the level of discussion and improve the
quality of decision-making on the board,
thus increasing the chances of the
company acting in the best interests of its
long term security and prosperity. The
NEDs are seen by many as important
components of corporate governance by
institutional investors as they strive to
ensure their investments are being
handled properly. Non-executive directors
should not just be talking to the board
directors. They should be spending part of
their time visiting plants, talking to people
at all levels and building up a picture of
how the company is running.