CORPORATE

GOVERNANCE

INTRODUCTION
Corporate governance is a term that refers
broadly to the rules, processes, or laws by
which businesses are operated, regulated, and
controlled. The term can refer to internal
factors defined by the officers, stockholders or
constitution of a corporation, as well as to
external forces such as consumer groups,
clients, and government regulations.
DEFINITION
Good corporate governance is the glue that
holds together responsible business
practices, which ensures positive workplace
management, marketplace responsibility,
environmental stewardship, community
engagement, and sustained financial
performance. This is even more true now as
we work worldwide to restore confi dence
and promote economic growth.


SCOPE
A well-defined and enforced corporate governance
Compliance best practices provides a structure that, at
least in theory, works for the benefit of everyone
concerned by ensuring that the enterprise adheres to
accepted ethical standards and best practices as well as
to formal laws. To that end, organizations have been
formed at the regional, national, and global levels.
In recent years, corporate governance has received
increased attention because of high-profile scandals
involving abuse of corporate power and, in some cases,
alleged criminal activity by corporate officers. An
integral part of an effective corporate governance
regime includes provisions for civil or criminal
prosecution of individuals who conduct unethical or
illegal acts in the name of the enterprise.

COVERAGE
Effective boardroom performance
Control and regulation
Executive leadership
The role and contribution of external (non-executive)
directors
The growing importance of governance in the wake of ever-
greater corporate scandals
Redefinitions and reassessments of corporate governance
models
The role of business in society
The changing nature of the relationship and responsibilities of
the firm towards various stakeholders
The incentives required to encourage more socially- and
environmentally-responsible corporate action
The role and impact of local and international regulatory
agencies and regimes on corporate behaviour.


Key Benefits

Keep abreast of developing trends in the field
Examine the role and performance of Boards
of Directors
Discover how governance issues are raised,
challenged and resolved
Implement successful decision making
processes within your organisation

Why is corporate
governance important?

Corporate governance refers to the way that Boards
oversee the running of a company by its managers, and
how Board members are held accountable to
shareowners and the company. This has implications
for company behavior not only to shareowners but also
to employees, customers, those financing the
company, and other stakeholders, including the
communities in which the business operates. Research
shows that responsible management of
environmental, social and governance issues creates a
business ethos and environment that builds both a
companys integrity within society and the trust of its
shareowners.

Principles of good corporate
Governance?


The Corporate Governance
in India
One of the major economic developments of this decade has been the
recent take-off of India, with growth rates averaging in excess of 8% for the
past four years, a stock market that has risen over three-fold in as many
years and a steady inflow of foreign investment. In 2006, total equity
issuance reached $19.2 billion in India, up 22%, while merger and
acquisition volume was a record $27.8 billion, up 38%, driven by a 371%
increase in outbound acquisition--exceeding for the first time inbound deal
volumes. Debt issuance reached an all-time high of $13.7 billion, up 28%
from a year earlier. Indian companies were also among the world's most
active issuers of depositary receipts in the first half of 2006, accounting for
one in three new issues globally, according to the Bank of New York. And, in
each of the years 2005 and 2006, the number of trades on the National
Stock Exchange of India, one of the two major Indian Stock Exchanges, was
third highest in the world, just behind NASDAQ and the New York Stock
Exchange, and several times greater than the number of trades on the
London Stock Exchange or Euronext. The long-term sustainability of the
India success story depends critically on the state of corporate
governance in the country.


Corporate Governance Cases
in India
Scandal at Satyam: Truth, Lies and Corporate Governance
When terrorists attacked Mumbai last November, the media called it "India's 9/11." That tragedy
has been succeeded by another that has been dubbed "India's Enron." In one of the the biggest
frauds in India's corporate history, B. Ramalinga Raju, founder and CEO of Satyam Computers,
India's fourth-largest IT services firm, announced on January 7 that his company had been
falsifying its accounts for years, overstating revenues and inflating profits by $1 billion. Ironically,
Satyam means "truth" in Sanskrit, but Raju's admission -- accompanied by his resignation -- shows
the company had been feeding investors, shareholders, clients and employees a steady diet of
asatyam (or untruth), at least regarding its financial performance. (Editor's note: Satyam is a
corporate sponsor of India Knolwedge@Wharton.)
Raju's departure was followed by the resignation of Srinivas Vadlamani, Satyam's chief financial
officer, and the appointment of Ram Mynampati as the interim CEO. In a press conference held in
Hyderabad on January 8, Mynampati told reporters that the company's cash position was "not
encouraging" and that "our only aim at this time is to ensure that the business continues." A day
later, media reports noted that Raju and his brother Rama (also a Satyam co-founder) had been
arrested -- and the government of India disbanded Satyam's board. Though control of the
company will pass into the hands of a new board, the government stopped short of a bailout -- it
has not offered Satyam any funds. Meanwhile, a team of auditors from the Securities and
Exchange Board of India (SEBI), which regulates Indian public companies, has begun an
investigation into the fraud. Since Satyam's stocks or American Depository Receipts (ADRs) are
listed on the Bombay Stock Exchange as well as the New York Stock Exchange, international
regulators could swing into action if they believe U.S. laws have been broken. At least two U.S. law
firms have filed class-action lawsuits against Satyam, but given the company's precarious finances,
it is unclear how much money investors will be able to recover.



DINESH DALMIAS STOCK SCAM :-
Dinesh Dalmia was the managing director of DSQ
Software Limited when the Central Bureau of
investigation arrested him for his involvement in a stocks
scam of Rs 595 crore (Rs. 5.95 bllion). Dalmia & aposis
group included DSQ Holdings Ltd, Hulda Properties and
Trades Ltd. Dalmia resorted to illegal ways to make
money through the partly paid shares of DSQ Software
Ltd. In the name of New Vision Investment Ltd., UK, and
unalloted shares in the name of Dinesh Dalmia
Technology Trust. Investigation showed that 1.30 crore
(13 million shares of DSQ Software Ltd. Had not been
listed on any stock exchange.

THANKS