WHAT IS CORPORATE GOVERANACE?
CORPORATE
A corporation is an organization created
(incorporated) by a group of
shareholders who have ownership of
the corporation.
GOVERNANCE
Oxford English dictionary defines
“governance "as the act, manner , fact
or function of governing sway control.
CORPORATE
GOVERNANCE
• Corporate governance is a system of making
Management accountable towards the
stakeholders for effective management of the
companies.
• Corporate governance is also concerned with
the morals, ethics, values, parameters,
conduct and behavior of the company and its
management.
SOME OTHER DEFINITION OF CORPORATE GOVERNANCE HAS
BEEN GIVEN FROM TIME TO TIME BY THE VARIOUS
AUTHORITIES: -

i. As per ICSI
ii. According to the Confederation of Indian Industry (CII)
iii. Basic and summarized definition
 Corporate governance mainly consists of two elements i.e.
A long-term relationship
A transactional relationship

In other words, 'good corporate governance' is simply 'good business'.

 Historical background Duties of a King

 Raksha (Protection)
Duties of a King
 Vriddhi
Raksha (Enhancement)Protecting shareholders
(Protection)
Arthashastra wealth Vriddhi (Enhancement) Enhancing wealth
 Palana
Palana (Maintenance) Maintenance of that
(Maintenance)
wealth Yogakshema (Safeguard) Safeguarding
 Yogakshema interests of shareholders
(Safeguard)
• Establish a code to ensure integrity.
• Safeguard the integrity of company

•
reporting.
Risk management and internal control.
• Improving access
• Disclosure of all relevant and material
NEED toOBJECTIVE
capital.
matters.
• Recognition and preservation of needs
• Improving
of shareholders. performance
CORPORATE
GOVERNANCE
• Shapes the growth and future of
capital market & economy.
• Rights and equitable treatment
• Protecting the interest of
of share holders. Shareholders and all other
• Interests of other stakeholders. stakeholder.
• Role and responsibilities of the • Creation of wealth.
board. PRINCIPLES
• Enables firm to compete
IMPORTANCE
• Integrity and ethical behavior. internationally in sustained way.
• Disclosure and transparency. • Keeps an eye on the issues of
insider training.
PARTIES TO Board of
Shareholders
CORPORATE or owners
directors Managers

GOVERNANCE

Others are: -

Workers
Regulators

Customers

Suppliers

Community.
Fundamental Pillars of Corporate Governance
INDIAN SCENARIO
Year Name of Committee/Body Areas/Aspects Covered

1998 Confederation of Indian Industry (CII) Desirable Corporate Governance – A Code

1999 Kumar Mangalam Birla Committee Corporate Governance
2002 Naresh Chandra Committee Corporate Audit & Governance
2003 N. R. Narayana Murthy Committee Corporate Governance

2004 J.J. Irani Adoption of Internationally accepted best

practices

INTERNATIONAL SCENARIO: -
Greenbury Committee , UK; Hampel Committee, UK; Blue Ribbon Committee, US; OECD & CACG
FRAMEWORK OF CORPORATE GOVERNANCE

Organizational Framework Legal framework

The organizational framework for corporate The Legal framework for corporate governance
governance initiatives in India consists of consists of the Company Laws and the SEBI
the Ministry of Corporate Affairs (MCA), Laws.
the Confederation of Indian Industry (CII)
and the Securities and Exchange Board of
India (SEBI).
ICSI NATIONAL AWARD FOR EXCELLENCE IN CORPORATE
GOVERNANCE

Best Governed Companies

MANDATED CG GUIDELINES AND DISCLOSURES

Annual, quarter, half year operating plans, budgets and updates.

Quarterly results of company and its business segments.
Minutes of the audit committee and other board committees.
Recruitment and remuneration of senior officers.
Materially important legal notices and claims, as well as any accidents, hazards, pollution issues and
labor problems.
Any actual or expected default in financial obligations.

Details of joint ventures and collaborations.

Transactions involving payment towards goodwill, brand equity and intellectual property.

Any materially significant sale of business and investments.

Foreign currency and other risks and risk management.

 Business Ethics and Corporate Governance
• Definition Of Business Ethics: Business Ethics Is A Form Of Applied Ethics That Scrutinizes Ethical Principles
And Moral Or Ethical Problems That Occur In A Business Environment.

• They complement each other, an ethical organisation is most likely to adopt good governance practices.
• Good governance means:- transparency, protection of rights of share holder
• Ethical guidelines
• Proper disclosure
• Act in good faith with due care, competence and due diligence.
CONCLUSION

Good corporate governance may not be the engine of economic growth, but it is essential for the proper functioning of the
engine. The investors both National and International would be loyal to invest in the Indian companies if they follow all the
standards of corporate governance practices.
Effectiveness of corporate governance system cannot merely be legislated by law neither can any system of corporate
governance be static. As competition increases, the environment in which companies operate also changes and in such a
dynamic environment the systems of corporate governance also need to evolve.
The essence of corporate governance is in promoting and maintaining integrity, transparency and accountability in the
management of the company as well as in manifestation of the values, principles and policies of a corporation.
Ultimately, good corporate governance practices in India will be shaped by our administrative and regulatory authorities like
SEBI, MCA, etc. by implementing transparent and effective corporate governance laws.