Cg Intro
- 2. Concept Narrowly as the relationship of a company to its shareholders or broadly as its relationship to Society Is about promoting corporate fairness, transparency and accountability. Is the system by which business corporations are directed and controlled. Spells out the rights and responsibilities among different participants – the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs.
- 3. History & Need Origin – 1990 – Adrian Cadbury - UK Shares owned by institutions managing pension funds. Hence needy people will be affected if the companies were not managed well. FDI could be attracted Competitive pressures leading to increased frauds/ falsifying accounts Privatization could lead to lowering of ethics
- 4. CG In India Historically large trading families operating – Birlas, Tatas etc. Post Independence, India went on a socialist path. Licence Raj From 1991 came a slow and steady phase of LPG (Liberalization, Privatization and Globalization) LPG implied more emphasis on Corporate Governance.
- 5. Corporate Structure in India Private Sector Promoter Director Professional/Independent Directors Institutional Director
- 6. Corporate Structure in India Public Sector Functional Directors Government Directors Outside Directors
- 7. Professionalising Corporate Governance Management and Control needs to be separated. Management (Initiation of proposals and their implementation) by CEO and his team. Control (Approvals and monitoring)by Board of Directors Active role of institutional investors can provided the much needed improvement in corporate governance. Role of non-executive directors to be increased. Proper and timely information to the Board Optimum Size of the Board – 10-12 members.
- 8. Professionalising Corporate Governance Improve Accounting and Reporting Practices Regular meetings of the Board – At least once every quarter At least 50% of the Board should comprise non-executive directors and at least one third of the independent directors Annual Report should have one section on Corporate Governance.
- 9. A few pointers to Good Corporate Governance Effective Leadership and Direction Good Management Environment Sound Risk Management Proper and timely monitoring systems Accountability
- 10. Thank You