Corporate Governance: Presented By: NITIN GOYAL-A3211116106 AKASH TYAGI - A3211116098

CORPORATE GOVERNANCE
PRESENTED BY:
NITIN GOYAL- A3211116106
AKASH TYAGI- A3211116098
WHAT IS CORPORATE GOVERNANCE
• Corporate governance is the set of processes, customs, policies, laws

and institutions affecting the way in which a corporation is directed,
administered or controlled.
• Corporate governance structure specifies the distribution of rights and
responsibilities among different participants in the corporation.
• Corporate governance also includes the relationships among the many
players involved and the goals for which the corporation is governed.
PRINCIPLES OF CORPORATE
GOVERNANCE
Sustainable development of all stake holders- to ensure
growth of all individuals associated with or effected by the
enterprise on sustainable basis
Effective management and distribution of wealth – to ensue
that enterprise creates maximum wealth and judiciously uses
the wealth so created for providing maximum benefits to all
stake holders and enhancing its wealth creation capabilities to
maintain sustainability
Discharge of social responsibility- to ensure that enterprise
is acceptable to the society in which it is functioning
Application of best management practices- to ensure
excellence in functioning of enterprise and optimum creation
of wealth on sustainable basis
Compliance of law in letter & spirit- to ensure value
enhancement for all stakeholders guaranteed by the law for
maintaining socio-economic balance
Adherence to ethical standards- to ensure integrity,
transparency, independence and accountability in dealings
with all stakeholders
OBJECTIVES OF CORPORATE
GOVERNANCE
The fundamental objective of corporate governance is to enhance shareholders' value
and protect the interests of other stakeholders by improving the corporate
performance and accountability.
It harmonizes the need for a company to strike a balance at all times between the
need to enhance shareholders' wealth whilst not in any way being detrimental to the
interests of the other stakeholders in the company.
It is integral to the very existence of a company and strengthens investor's confidence
by ensuring company's commitment to higher growth and profits.
IMPORTANCE OF CORPORATE
GOVERNANCE
Corporate governance is an important aspect of business..
It helps streamline the process and gives people accountability.
The point of corporate governance is to help the decision making process.
One of the main goals is to clearly explain to the board, the stakeholders, and the
shareholders what their duties and responsibilities are within the company.
With knowing those roles and responsibilities, the people within the corporation can
understand what they are held accountable for.
Accountability is what helps people within the company make decisions.
CORPORATE GOVERNANCE - ELEMENTS
Role and
powers of
Board
Code of Legislatio
conduct n
Element
s
Managemen
Board t
Independence Environmen
t
Role and powers of Board- Good governance is decisively the manifestation of personal beliefs
and values, which configure the organizational values, beliefs and actions of its Board. The
foremost requirement of good governance is the clear identification of powers, roles,
responsibilities and accountability of the Board, CEO, and the Chairman of the Board.
Legislation- Clear and unambiguous legislation and regulations are fundamental to effective
corporate governance. Legislation that requires continuing legal interpretation or is difficult to
interpret on a day-to-day basis can be subject to deliberate manipulation or inadvertent
misinterpretation.
Management Environment- Management environment includes setting-up of clear objectives
and appropriate ethical framework, establishing due processes, providing for transparency and
clear enunciation of responsibility and accountability, implementing sound business planning,
encouraging business risk assessment, having right people and right skill for the jobs,
establishing clear boundaries for acceptable behaviour, establishing performance evaluation
measures and evaluating performance and sufficiently recognizing individual and group
contribution.
Board independence- Independent Board is essential for sound corporate
governance. This goal may be achieved by associating sufficient number of
independent directors with the board. Independence of directors would ensure that
there are no actual or perceived conflicts of interest.
Code of conduct- It is essential that the organization’s explicitly prescribed norms
of ethical practices and code of conduct are communicated to all stakeholders and
are clearly understood and followed by each member of the organization. Systems
should be in place to periodically measure adherence to code of conduct and the
adherence should be periodically evaluated and if possible recognized
MECHANISM AND CONTROL
Corporate manner of government systems and powers are developed to lessen the
incompetency’s that emerge as of meaning hazard and unfavorable choice.
There are either interior tracking setups or outside tracking setups.
Internal tracking may be completed, for instance, by one (or a few) great
shareholder(s) in the situation of confidentially grasped businesses either a firm
belonging to a trade cluster.
External tracking of managers’ conduct happens once an autonomous 3rd party (e.g.
the outside auditor) attests the precision of data presented by administration to
financiers.
INTERNAL CORPORATE
GOVERNANCE CONTROLS
Internal corporate governance controls (internal controls) play a vital role in ensuring
the success of a business organization and preventing corporate fraud. Internal
control activities that ensure proper corporate governance include:
1. Monitoring by board
2. Internal audits and robust policies
3. Proper balance of power
4. Performance based remuneration
5. Monitoring by large shareholders and other stakeholders
MONITORING BY BOARD
The board should monitor the corporate governance of the company through continuous review of its internal structure.
This ensures that there are clear lines of accountability for management throughout the company. The board should also
monitor and review:
Corporate strategy
Major plans of action
Risk policy
Annual budgets and business plans
Corporate performance
major capital expenditures, acquisitions and divestitures
governance practices and changes
selection, compensation and succession planning of executives
key executive and board remuneration
INTERNAL AUDITS AND ROBUST
POLICIES
Regular internal audits have to be carried out by auditors employed by the
organization in order to assess the health of governance processes, operational health
and financial reporting.
Robust internal control policies should also be implemented to ensure that the
company lives up to its obligations to investors, stakeholders, employees, the
environment, the government and the public at large
PROPER BALANCE OF POWER
A separation of powers and responsibilities between management groups ensures that
there’s a proper system of checks and balances in place, with one group
implementing policies and another ensuring that these are implemented and
functioning in the right manner.
PERFORMANCE BASED
REMUNERATION
Executive pay, a contentious topic following the 2007-08 financial crises, is expected
to be linked to performance in order to ensure that management is rewarded for
operating the company keeping in mind the rights of investors and other
stakeholders.
MONITORING BY LARGE SHAREHOLDERS
AND OTHER STAKEHOLDERS
Individuals and institutions that have large shareholdings (and financial institutions
such as banks who are creditors) have the right to monitor the performance of the
management, acting as an effective internal control measure.
EXTERNAL CORPORATE
GOVERNANCE CONTROLS
External stakeholders play an important role in ensuring proper corporate governance
processes in a business organization. Some of the key external corporate governance
controls include:
Government regulations
Media exposure
Market competition
Takeover activities
Public release and assessment of financial statements
GOVERNMENT REGULATIONS
Government regulations are the most effective external controls on the governance of
a company. Companies are required to comply with these or face penalties for
violations.
Most corporate governance regulatory requirements are based on the OECD
Principles of Corporate Governance.
MEDIA EXPOSURE
Media scrutiny of the workings and processes of a company ensures, to a certain
degree, the proper governance in an organization. Whistleblowers often expose
wrongdoing within a company to the government and media organizations
MARKET COMPETITION
Companies with the best corporate governance practices have the best standing in the
market. Reputation, credibility and positive public perception all play a vital role in
boosting a company’s image and thus help it trump its competition and best its peers.
TAKEOVER ACTIVITIES
Takeover activities lay a company’s internal processes and workings open to public
scrutiny. Both government regulators and the media will focus on the internal
policies and governance structures, thus acting as an effective external control.
PUBLIC RELEASE AND ASSESSMENT OF
FINANCIAL STATEMENT
The public release of financial statements by listed companies exposes them open to
assessment or scrutiny by regulators, investors, members of the public and so on.
This acts as an external control as companies have to be scrupulous and careful about
the details included in these statements and in ensuring that they are properly
prepared and audited.
CONCLUSION
As Indian companies compete globally for access to capital markets, many are finding that the ability to
benchmark against world-class organizations is essential.
For a long time, India was a managed, protected economy with the corporate sector operating in an insular
fashion.
But as restrictions have eased, Indian corporations are emerging on the world stage and discovering that the
old ways of doing business are no longer sufficient in such a fast-paced global environment.

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CORPORATE GOVERNANCE

• Corporate governance is the set of processes, customs, policies, laws

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