Corporate Governance

Safdar H.Tahir

Topics

Types of Boards Land Marks in Emergence of Corporate Governance.

Safdar H. Tahir

Types of Boards

Composition:
Unitary Two-tiered

Tenure
Common tenure Staggered

Anglo-Saxon Model
Theoretically this model is revolving around three main characters namely shareholders, board of directors and managers. In theory, shareholders are powerful because they elect board of directors and cast vote at annual general meetings

Anglo-Saxon Corporate Governance System

Theoretically

(Practice)
powerful shareholders have become powerless.

relatively
Boards

of directors average 12 members in US.

Boards of directors are potentially uniformed and unmotivated.

They have become merely a rubber stamp in the hand of management.

.

Berle and Means Model

1930s, the U.S. business became more prolific. Berle and Means, argued the most of the units of businesses were owned by either individuals or small groups. The firms were either managed by owners themselves or appointees by owners.

Berle and Means model

Is the Berle and Means model existing in the real world???

THE JAPANSES MODEL

A high level of ownership association among banks and corporation named as Keiretsu. Keiretsu is a well built and well defined, long-run industrial, trading commercial association among allied banks and corporations, participate largely in debt and equity financing of enterprise. A legal, public policy and industrial policy networking structure planned to support and promote keiretsu. In Japanese model of corporate

THE GERMAN MODEL

The corporate governance model of German is significantly different from both the Anglo-Saxon model and The Japanese model of corporate governance, although some of its features resemble with the Japanese model. In both German and Japan model, institutional investors play very important role in the formation of corporate governance structure. In both countries, Japan and German, bank representatives are elected to the board of directors but this representation is constant in Germany while in Japan the representation comes only at the time of financial distress.

German Corporate Governance System

Balance on the Board

Balance of representation Balance of talents / abilities Balance of power Balance of attitudes or views

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Consequences of Imbalance

Board can be misguided by the executives Interest of only one stakeholder is served Poor decision making Status quo mentality Lack of communication Things start getting fixed
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Cadbury Code Guidelines

Regular meetings Monitoring executive performance Draw clear lines of authority Good board room practices

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Board Room Practices

Every one should participate Formalized written procedures Induction program for directors Each director should get the same information at the same time No post-facto approvals Chairman decides the content of the agenda
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Role of Chairman

Running the board, chairing its meetings Ensuring all directors get timely and complete information Acting as bridge between the board and shareholders / stakeholders Evaluating the performance of individual directors Arbiter in event of internal disputes
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Responsibilities of CEO & Senior Management

Operating the company in an effective and ethical manner according to policies set by the Board Drawing the strategic plans Drawing annual plans and budgets Selection of managerial and other staff Identifying business risks Financial reporting Internal Controls Code of Conduct for all staff
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Duality of Office: Chairman & CEO

Speeds up decision making Quick action Saves cost: often only one salary More effective due greater powers:
Within the company Dealing with outsiders

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Thing to Ponder

Duality desirable or not??

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Thank you
Safdar H. Tahir

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The Shareholders
Safdar H.Tahir

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Who is a shareholder

Owner Beneficiary Risk bearer Decision maker

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Types of Shares

Ordinary shares Preference Shares Other types

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Features of Ordinary Shares

Permanency No nominal cost to the company Residual claim on profits Residual claim on assets Voting rights

Cumulative voting rights

Right of purchasing new shares

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Committees of a Board
Safdar H. Tahir

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Why Committees?

To get impartial and professional input Reduce work load for directors More detailed work Specialization principle

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Common Committees

Audit Committee Nominations Committee Remunerations Committee Executive Committee Ad hoc Committees

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Audit Committee

Membership All NEDs, preferably all INEDs Chairman must be INED Can take external help if needed US law says at least one member of AC must be a finance / accounting professional
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Responsibilities of AC

Oversight of financial reporting and accounting policies/systems Liaison with external and internal auditor Ensuring regulatory compliance for disclosures Monitoring internal controls Oversight of risk management processes
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Audit Committee Issues

Composition
All NEDs Majority INEDs Chairman of the company not a member

Duration Frequency of meetings

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Nature of Audit Committee

It is not an executive body. It does not draw up accounting policy; its role is only to review and oversee. It does not perform internal or external audit. It reports to the Board, not management. It issues advice to management, not directives.
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Best Practices for Audit Com

The prime tool of good corporate governance. Managing its agenda:

annual, quarterly programs Formal meetings with executives Formal meetings with external auditor

Frequency of interaction with management Regular self evaluation

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External Auditor & Audit Committee

Negotiations with external auditor

Verifies suitability of the external auditor Their resources, qualifications, independence, past record Linkages, non-audit work Rotation, former employees of audit firm Audit firms performance, ethics

Ensures independence

Discusses report / management letter with external auditor

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Situation in Pakistan on ACs

Law is being followed in words but often not in spirit. Often EDs are members of AC In some cases, company chairman or CFO is made chairman of AC Since the whole board is subservient, no hope for truly independent members of audit committee.
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Nominations Committee

Responsibilities Formalization of process of finding good directors & senior managers Evaluation of directors individual performance Succession planning Board size and structure
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Remunerations Committee

Drawing up Remuneration Policy for directors and senior managers Ensuring that directors are not paid any additional fee or given consultancy assignments etc. Oversight of bonus computation for directors Ensuring the proper disclosure is made in respect of directors remuneration

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Basis of Remuneration

Fixed salary only Bonus only Combination

Balance between the components Too high fixed salary as bad as too high bonus

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Fixed Salary

Promotes lethargy; status quo mentality Dampens entrepreneurial initiative Increases staff turnover

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Performance Based Pay

Bonuses
Cash Free shares Share options

Basis of computation
Base figure: sales, profit, market share, etc Short term view Long term view: gradually increasing bonus 45

Balance in Components

What is the right mix? Too high salary promotes lack of initiative Too high bonus promotes:
short term view Dishonesty; greed; fudging

CCG recommends 1 : 2 ratio

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Situation in Pakistan

Executive directors do not run the board, controlling shareholder does. Directors remuneration treated as employee salary issue. NEDs not paid any thing at all except attendance fee. Remuneration committees do not exist in Pakistan
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Executive Committee

Some decisions can only be taken by board but board cannot meet too frequently; hence executive committee with delegated powers. Often has EDs and some INEDs as members Meets frequently to dispose off routine executive matters Gives detailed report to board on more important matters

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Executive Committee - 2

Reduces work for the board Provides specialized input to the board Provides extra layer of checking Has more time to investigate and give more detailed report Serves as lower tier of a unitary board.
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Ad hoc Committees

Created for a situation, purpose or time and liquidated afterwards Project Committee; Investigation Committee, Negotiations Committee, etc. Terms of reference decided by the board on need basis.

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Thank you
Safdar H.Tahir

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BOD: A powerful instrument of Governance

Safdar H. Tahir

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BOD

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Importance of the Board

It is often believed, by stakeholders, social scientists and the regulators alike, that the key to good corporate governance lies in the hands of a companys Board. But: How does a Board become good? Is a good Board born or made? Is a Board free to be good?
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The Boards Role

Provide entrepreneurial leadership Set strategic objectives of the company Arrange for resources needed to achieve the strategic objectives Review management performance Set the companys values and standards Act as a bridge between stakeholders
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Different Board Types: The Good, Bad, and Ugly

Yes-men Board Rubber Stamp Board Good Old Boys Board

The Real Thing

Country Club Board Trophy Board

Paper Board

?
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Functions of a Board

Oversight Directional Advisory

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Oversight Function

Approving and monitoring strategic plans. Approving and monitoring annual plans, operational and capital budgets Engaging external auditors Ensuring integrity of annual report Review of major operational activities
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Directional Function

Setting companys mission statement, vision statement, value statement, etc. Appointment of CEO and other senior executives Planning for succession of senior executives Appointing various committees like audit, remuneration, executive, etc.
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Advisory Function

Guidance What else is happening in the world Different perspective Specialized input on specific areas

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Tools Available

Composition of the board Independence of the board Committees External help where necessary Governmental intervention

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Boards Responsibilities

Collective responsibilities of the board Individual responsibilities of each director

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Collective Responsibilities

Acting in the best interest of the company. Accountability to owners Statutory duties: Directors have to

comply with a number of obligations in terms of the Companies Act Keeping minutes of all meetings Filing periodic reports and financial statements Stock exchange updates

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Duties of Director

The common law Statutes The memorandum and articles of association of the company Service agreements specifically entered between the director and the company Resolutions passed at members or directors meetings
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The common law

Director's fiduciary duty (Fiduciary meaning of trust) Conflict of interests Duty of care and skill

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Statutory Duties

A director's duties in terms of the Companies Act

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Test of Fiduciary Duties

Transactions are reasonably incidental to companys business Good faith, believing the transactions to be correct. Disclosure of conflict of interest

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Duties in terms of the memorandum and articles of association

The memorandum of association determines the scope of the companys objects and powers, while the article of association is a contract between members themselves and between members and the company

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Types of Boards

Composition:
Unitary Two-tiered

Tenure
Common tenure Staggered

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Balance on the Board

Balance of representation Balance of talents / abilities Balance of power Balance of attitudes or views

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Consequences of Imbalance

Board can be misguided by the executives Interest of only one stakeholder is served Poor decision making Status quo mentality Lack of communication Things start getting fixed
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Cadbury Code Guidelines

Regular meetings Monitoring executive performance Draw clear lines of authority Good board room practices

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Board Room Practices

Every one should participate Formalized written procedures Induction program for directors Each director should get the same information at the same time No post-facto approvals Chairman decides the content of the agenda
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Role of Chairman

Running the board, chairing its meetings Ensuring all directors get timely and complete information Acting as bridge between the board and shareholders / stakeholders Evaluating the performance of individual directors Arbiter in event of internal disputes
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Responsibilities of CEO & Senior Management

Operating the company in an effective and ethical manner according to policies set by the Board Drawing the strategic plans Drawing annual plans and budgets Selection of managerial and other staff Identifying business risks Financial reporting Internal Controls Code of Conduct for all staff
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Duality of Office: Chairman & CEO

Speeds up decision making Quick action Saves cost: often only one salary More effective due greater powers:
Within the company Dealing with outsiders

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Thing to Ponder

Duality desirable or not??

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Thank you
Safdar H. Tahir

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Corporate Governance
Handout 6

A corporate governance is a system/mechanism that is intended to solve the conflict of interests between shareholders and management. In theory, these corporate governance systems can improve firm performance by increasing the incentive for management to shareholders values. We have discussed whether various corporate governance systems can be viewed as the system to alleviate the

The effects of corporate governance on firm performance

For example, we discussed if the main bank system or the existence of large shareholders can be viewed as systems/mechanisms to solve the conflict of interests, and we have shown that these systems can be properly viewed as corporate governance systems. However, we have not much discussed if these corporate governance systems can indeed enhance firm performances.

We have already seen some results. We saw that 1. The introduction of Chief-Officer system in Japan has not improved firm performance 2. The existence of large foreign shareholders improves firm performance in Japan. Today, we investigate the following. 1. Whether the main bank system has a positive effect on firm performance.

As noted already in Handout 3, the main bank system in Japan has been considered as an alternative corporate governance system. In particular, dispatching a director to its client (by the main bank) has been viewed as a monitoring mechanism that substitutes the US style market-force based disciplinary mechanism.

The effect of main bank system on firm performance

In handout 3, we showed that, when a firm experiences low performance in terms of ROA, its main bank is likely to dispatch a senior directors to the firm . This result indicates that the dispatch of a bank-director can be viewed as a monitoring system. However, we have not discussed whether the dispatch of a bankdirector by the main bank would actually enhance the firms performance.

The effects of bank-dispatched directors on the firm performance

The discussion will be based on Saito and Odagiri (2008). Saito and Odagiri examined if a new appointment of a senior director would improve the industry adjusted ROA. Consider the change in industry adjusted ROA (ROA)it=(ROA)it+1-(ROA)it

where (ROA)it is the industry adjusted ROA of firm i at year t. The basic idea is to examine if the dispatch of a bank

The simplest method is to estimate the following equation. (ROA)it=0+1(Bank director)it

Where (Bank director) is a dummy variable that indicates if the main bank dispatched a director to the firm i in year t. There are two problems with this method. 1. The bank director is likely to be dispatched when the firm performance is bad. And there is a tendency that, when firm experience a bad performance, the performance improves on the subsequence period (this is called meanreversion). Then we cannot distinguish

Second, the effects of bankdispatched directors may be different at different firm performance levels. For example, the dispatch of a bank director may be more effective when the firm is performing poorly than when the firm is already performing well. To mitigate these problems, Saito and Odagiri estimates the following.

(ROA)it=0+1(ROA)it +2(Bank director)it

ROA +3(Bank director)it(ROAitROA

Where is the sample average of ROA. In this equation captures the 1 mean-reversion effect. The coefficients and captures 2 3 the effects of a dispatch of bank director on the change in ROA, that

The effect of a bank-dispatched director now depends on the ROA at the beginning of year t.

The effect of bank directors on (ROA)it is given by

ROA

The effect = 2 + 3(ROAit-

The results. 1. The coefficient for

Variable Constant (0) (ROA) (1) Coefficients 0.0516 (0.0404) -0.1502*** (0.0117)

(Bank Director) 0.2827 (2) (0.0918) (Bank Director) -0.2757** (ROA) (0.1123) ROA (3)

ROA is negative and significant. This indicates that the meanreversion is at work: When firm performance is bad in year t, there is a tendency for the performance to improve, or to go back to the mean.

The results. 2. The coefficient for

Variable Constant (0) (ROA) (1) Coefficients 0.0516 (0.0404) -0.1502*** (0.0117)

(Bank Director) is positive, but not significant. This means that, when the firm is performing on average, the dispatch of bank director may not improve the firm performance.

(Bank Director) 0.2827 (2) (0.0918) (Bank Director) -0.2757** (ROA) (0.1123) ROA (3)

The results. 3. The coefficient for

Variable Constant (0) (ROA) (1) Coefficients 0.0516 (0.0404) -0.1502*** (0.0117)

(Bank Director)(ROAROA ) is negative and significant. This means that, when the firm is performing badly, a dispatch of a bank director positively affect the firm performance. To see this point, see next slide.

(Bank Director) 0.2827 (2) (0.0918) (Bank Director) -0.2757** (ROA) (0.1123) ROA (3)

The previous slides show that, when the firm is performing badly, a dispatch of a bank director improves firm performance. Firm performance does not necessary improve when a bank director is dispatched to a firm which is already performing well. Lets see by how much a dispatch of bank directors can improve firm performance measured by industry adjusted ROA.

The magnitude of the effect.

The sample average of ROA is 0.74 ROA (that is, =0.74) Consider a firm whose industry adjusted ROA is -3.32% (this is the sample average of ROA for the firms who experienced negative ROA). If the main bank dispatches a director to this firm, then the ROA is expected to increase during the year ROA by 2 + 3(ROAit)

=0.2827-0.2757*(-3.32-0.74) =1.402

Summary

When a firm is performing badly, a dispatch of a bank director will improve the firm performance. When a firm is already performing well, a dispatch of a bank director does not necessarily improve firm performance. Thus, Saito and Odagiris study shows that the main bank system can enhance firm performances

The effect of board size on firm performance

It has been argued that a board with too many directors negatively affect corporate performance since efficient decision making is difficult in a large board. Jensen (1993) points out the great emphasis on politeness and courtesy at the expense of truth and frankness in boardrooms and states that when boards get beyond seven or eight people they are less likely to

There has been many studies in the US that show that the size of the board has a negative impact on firm performance. For example, Yarmack (1996) shows that when a board size doubles, the Tobins q (market to book asset ratio) would fall by as much as 0.23. Today, we will investigates if the size of the board has a negative effect on firm performance in Japan. The discussion is based on

Does the size of the board matter in Japan?

Nakayama (1999) investigates the effect of board size on the efficiency of manufacturing firms in Japan. The empirical methodology used in his paper is slightly different from what we have seen previously. I will provide a short description of the methodology first.

Nakayama first estimate efficiency score for each firm by estimating a stochastic production function. Second, Nakamura checks if the board size has a negative effect on the estimated efficiency of each firm. To describe the above method, consider that the production technology of firms can be described by the following production function Q=F(L,K) Where Q is the output, L is the amount of labor, and K is the amount of capital. To make things more simple, consider that for a moment, a production function that

Suppose that the production function, Q=F(L) has the following shape.
Q

If a firm is operating efficiently, then the firm should be operating on the production function, like this.

However, if the firm is not operating efficiently, the firm would be operating under the production function, like this.
Q

The firm is not operating on the production function.

For this firm, we can define efficiency score as OP/OA.

Q P Efficiency score = OP/OA

If the firm is perfectly efficient (that is, operating on the production function), the efficiency score will be one. If there is any inefficiency, the efficiency score will be lower than 1. L O

Therefore, the basic idea of Nakamuras study is to estimate the efficiency score for each firm, then check if the size of the board has a negative effects on the efficiency. More specifically, Nakamura estimates the following production function Qi=0+1log(Li)+2log(Ki)+i-ui

Where Qi is the value of output (sales), Li is the number of workers, and Ki is the value of the fixed asset for ith firm. The term i is the error term and ui is the efficiency score to be estimated. We make a certain distributional assumption of i and ui to

Data

The data is 32 manufacturing firms for the period between 1992-1998, from Mitsubishi Research Institutes kigyo-no keiei bunseki.

The distribution of the board size

Relative frequen cy

The number of directors in a

The results
There are two steps. First step is to estimate the production function. By estimating production function, as a by product, you can estimate the efficiency score for each firm. The Production function estimation below is the estimatediscoefficients This the estimated results so-called for production function. ofProductionCobbVariable Coefficient Douglas

Log(L) Log(K) Constant 0.909*** (0.098) 0.150*** (0.03) 1.906*** (0.093) function. As a by-product, we can estimate the efficiency score for each observation. [Details are omitted]

As a by-product of the production function estimation, we obtain the estimates for the efficiency score for each firm for each period. Nakamura then estimates the following.

(Efficiency score*100)it =0+1(Number of directors)it+3(Sales)it

The results
The effect of board size on the efficiency of manufacturing firms (Dependent variable is Efficiency Score*100) Variable The number of directors Sales Coefficient -15.594** (7.662) 20.634 (3.846)

As can be seen, the number of board has a negative and statistically significant effect on the efficiency of the firms. For each additional board will reduce the efficiency score by as much as 15.6%. This results show that, like in the US, a large

Several questions
A good board: 1: Small 2: Independent 3: And at the same time, interested in protecting shareholders value. 4: And at the same time, being able to work as a team Is this possible to find such a team of people?

Does the morality of individual directors matter? If so, how much does that matter? Should a director not pursue its own interest?

References
Saito, T and Odagiri H (2008) Intra-Board Heterogeneity and the Role of Bank Dispatched Directors in Japanese Firms: An Empirical Study. Pacific-Basin Finance Journal, 16, 572-590 Nakayama, Yoshinori (1999) Yermack, David (1996) Higher market valuation of Companies with a small board of directors. Journal of Financial Economics 40, 185-211

Classification of Equity shareholders

Internal (invest to own and run_

Corporate shareholders (holding companies) Families, groups of friends

External (invest only for a return)

Individuals Institutional investors.

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Internal Shareholders

Controlling shareholders Majority not a necessity Scene in the West Situation in Pakistan

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External Shareholders

Generally not on the board. Lack of unity Lack of interest Therefore, lack of influence

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Small Private Shareholders

Individuals Only interest in share price change No long term interest Only a little interest in earnings Reactive buyers/sellers Biggest losers when things go bad No influence over Boards
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Large Private Shareholders

Individuals (but may be acting through trusts, private limited companies, etc.) Have long term interest in the company May have great influence on the company May provide bulk of executive directors In Pakistan, these people are the

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Corporate Shareholders

Holding companies Multinationals Groups Characteristics

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Institutional Investors

Mutual Funds Managed Funds Pension Funds Life Insurance companies Banks In UK, it is believed that institutional shareholders hold, on an overall basis, a majority of shares of all listed companies.

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Institutional Investors Perspective

Long term interest in share value growth. Current returns are still important. Ability to evaluate performance. Power and ability to influence Boards. But do they have the time to pay attention to every single company. Monitoring systems for danger

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Role of IIs in CG

Capability and Capacity to influence. Dialogue with directors Regular evaluation of financial reports
Flag off danger signals Sharing info with other stakeholders

Judicious use of Vote Could / should seek representation on board

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Some interesting facts

10% of EDs in European companies do not know who their top 50 shareholders are. 25% of their CEOs had met only half of their top 50 shareholders In Pakistan, most listed companies have majority held by a family or group and they do not seem to attach any importance to any other shareholder.
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Expectations from a Company

Accountability of board members Transparency in all transactions Company interest over self interest Effective and efficient management leading to good returns and capital growth. Fair share of real profits.
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Shareholders Hold on Board

Shareholders must approve: Class 1 transactions

Large size relative to size of the company

Related party transactions Financial statements

Audit report is for shareholders

Directors remuneration Shareholders elect and can remove

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The AGM

Attendance should be encouraged Asking of questions to be encouraged Individual voting on issues (No grouping of issues) One vote, one share Proxy facility
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Communication between Shareholders & Board

Direction: One way reporting or Two way communication Nature: Formal or Informal communication Scope: All or some shareholders Frequency: Regular or irregular, need based.

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Communication Instruments

Statutory reports Chairmans report (OFR) Compliance reports Newsletters, circulars Meetings with major shareholders Correspondence

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Shareholders Activism
Refers to stand taken by shareholders against recommendations of the Board. Do they have adequate rights or power?

Result less important than show of dissent.

Can work only if institutional investors participate. Do institutional investors have a duty

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Areas of Dissent

Re-election of directors Re-appointment of auditors Approval of directors remuneration Approval of annual accounts Dividend recommendations Changes in share capital Other approvals
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Shareholders Activism 2

If institutional investors join hands with smaller shareholders. Monitoring of board performance Direct intervention Regular evaluation and sharing of analysis But remember, institutional investor organizations are all run by managers so they have affinity for managers.

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Thank you
Safdar H.Tahir

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What is it about?

Corporate Governance

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Company

What is a company? Characteristics of a Company Types of Companies

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Characteristics of a Company

Ownership in shares Freely transferable shares Separate entity apart from shareholders Liability of shareholders Indefinite life Board of directors
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Types of Companies

Limited or Unlimited Limited by shares or by guarantee Private or Public Listed or Unlisted

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Hierarchy of a Company

Shareholders

Own the company, do not run it. Elected by and reporting to shareholders

Board of Directors

Management
Appointed by and reporting to directors Includes executive directors

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Top Players

Shareholders: Voting power Chairman:

May be executive or non-executive May be executive or non-executive May or may not be a director May or may not be directors
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Directors

Chief Executive Officer

Senior Managers:

Classification of Stakeholders

Owners Lenders Employees Business Associates

Suppliers and Customers Includes government

Society

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Opportunity to protect individual interests

Managers and Employees have the greatest opportunity to protect their interest(s) Suppliers and Clients essentially go by each transaction or contract. Lenders and Shareholders are most vulnerable. Society depends entirely on law
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Classification of Stakeholders
Classified on basis of Role in the Company Owners Classified on basis of opportunity to protect individual interests Those with Full Opportunity Controlling Shareholders Those with a Partial Opportunity Those with Virtually No opportunity

Institutional Investors Minority and individual with Board shareholders with no representation board Representation Buyers of listed bonds Other lenders with trustee arrangements

Lenders

Financial institutions with elaborate lending Contracts

Employees

Executive Directors Senior Managers

Other employees on regular or contract terms

Business Associates Society

Suppliers who sell Major Suppliers and Smaller suppliers only on cash terms clients with contracts and smaller clients Government Public at large
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Need for Corporate Governance

To protect and serve individual interest of each stakeholder To protect and serve the collective interest of all stakeholders To ensure no one benefits at the expense of another To ensure no stakeholder has monopoly of decision-making.
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Governance & Management

How do these terms differ? Does Governance include Management? Or Does Management include Governance?

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Governance & Management

Governance
Approval of Plans Providing overall leadership Arranging resources Controlling managers

Function
Planning Leading

Management
Preparation of plans Leading those who implement plans Tasks division & resource usage Controlling employees
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Organizing Controlling

Governance

Strategic Setting Objectives Devising plans to achieve these objectives Setting rules or parameters Not directly concerned with routine affairs Protection of Interests of all stakeholders

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Management

Current & Operational Affairs Taking directions from the Board Implementing the Plans Developing Suggestions and Alternatives

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Approaches to Corporate Governance

Shareholders Approach Stakeholders Approach Enlightened Shareholders Approach Which approach is best?

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Corporate Sins

Sloth

Unwillingness to take initiative or risk, prefer status quo, be lazy. Putting self above company Not annoy or stand up to any stakeholder / investor / boss.
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Greed

Fear

Agency Theory

What is Agency Theory? Does it apply to companies? Two-party and three-party model Principal-Watchdog-Agent

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Key Issues

Financial reporting Directors remuneration Risk management Effective communication Corporate Social Responsibility

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Financial Reporting

Accuracy Reliability

Internal and external audit

Comprehensiveness Timeliness

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Directors Related Issues

Remuneration Powers Balance between:

executive and non-executives

Election and re-election Representation

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Risk Management

Risk profile What risks to take?

Avoidable and non-avoidable risks

What not to take? How to handle risks taken?

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Communication

Transparency Regular communication With who? In what format?

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Corporate Social Responsibility

Business Ethics Being a good citizen Doing business responsibly

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Why is CG Important?

Good reputation is good business Protection of stakeholders interest Support to capital markets Support to society Every one wins

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Thank you
Safdar H.Tahir

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