What is Corporate Governance?

Corporate governance is a means whereby society can be sure that corporations and family businesses are well-run institutions to which investors and lenders can confidently commit their funds. Corporate governance creates safeguards against corruption and mismanagement, while promoting fundamental values of a market economy in a democratic society. Fairness, transparency, responsibility, and accountability are the core values of corporate governance. n light of the !sian financial crisis, high profile scandals in "ussia and #atin !merica, and the increased focus placed on governance practices in the $iddle %ast and &orth !frica, corporate governance has been brought to the forefront and has become a ma'or issue for businesses in the increasingly globali(ed economy. &ational business communities are learning and re-learning the lesson that there is no substitute for getting the basic business and management systems in place in order to be competitive internationally and to attract investment. !t its most basic level, corporate governance deals with issues that result from the separation of ownership and control. )ut corporate governance goes beyond simply establishing a transparent and responsible relationship between managers and owners. *he presence of strong corporate governance standards provides increased access to capital and thereby aids economic development. Good corporate governance attracts investors by assuring them that the business environment is fair and transparent+ that companies can be held accountable for their actions or lack thereof+ and those investments can be protected and contracts enforced. Why do we need Corporate Governance?With increased global competitiveness, the growing market in )ahrain is faced with the challenge of attracting and retaining investment in order to participate more fully in the global economy and address mounting demographic concerns. ncreasing awareness and implementation of good corporate governance practices can improve the investment climate and promote the development of a vibrant private sector and capital market., *he interest in corporate governance is due to globali(ation, as investors are now reaching out to foreign countries to establish businesses. Foreign investors are depending on corporate governance because it is building legal protocol that is ensuring businesses to be accountable., )usinesses are becoming aware of the benefits corporate governance and responsibility provides their company and their nation. *he regions- demographic demonstrates that ./0 of the !rab population is between the age of 1.-2/, making them the future labor force. )y creating effective corporate governance and responsibility in the region, businesses are ensuring that future generations will have 'obs as well as protecting their economies., 3eveloping the role of the board of directors is a strategic tool for sustainable business development to overcome obstacles in the $%&! region along with corporations4 responsibilities and issues related to sustainable development., %ffective corporate governance and responsibility are becoming central to achieving success in the global business environment and the development of the $%&! region economic structure., Following on the concept that business environment in the $%&! region is uni5ue in the sense of cultural structure and needs, global concepts such as corporate governance and responsibility, developed and implemented abroad need to be locali(ed to be effective tools. )enefits to Companies)enefits of !dopting Corporate Governance 6rinciples n addition to benefiting the national economy applying effective corporate governance practices can benefit both the company and its shareholders.Compliance with Corporate Governance principles can benefit the owners and managers of companies in the following ways7, mprove access to capital and financial markets+, 8elp to survive in an increasingly competitive environment

through mergers, ac5uisitions, partnerships, and risk reduction through asset diversification+, !ddress succession issues in family-owned businesses with the transition from one generation to another, as well as reducing the chance for conflicts of interest to arise., #eads to a better system of internal control, thus leading to greater accountability and better profit margins., 6aves the way for possible future growth, diversification, or a sale, including the ability to attract e5uity investors, "educe the cost of credit because lenders are assured of good management practices., !voids the pressure of undertaking serious corporate governance reforms at a high cost and upon the demand of outsiders, often in a time of crisis., ncreases the confidence of investors and potential partners to invest in or e9pand the company-s operations.)enefits to :hareholders7, 6rovides the proper incentives for the board and management to pursue ob'ectives that are in the interest of the company and shareholders, as well as facilitate effective monitoring., 6rovides shareholders with greater security on their investment., %nsures that shareholders are sufficiently informed on decisions concerning fundamental issues like amendments of statutes or articles of incorporation, sale of assets, etc.

"%C%&* 3%;%#<6$%&* & C<"6<"!*% G<;%"&!&C% & &3 ! n recent years, hardly a month goes by without news of a new development in the corporate governance framework which overhangs the law of companies, both domestically and internationally. !n overview of some of the recent developments in the area of corporate governance is set out below7<%C3 "eport on the "ole of nstitutional nvestors in 6romoting Good Corporate Governance*he <%C3 has recently published a report e9amining the role of institutional investors in promoting good corporate governance. *he report covers a range of topics including voting and engagement patterns, the role of foreign investors, and cooperation between investors. t encompasses 2= countries including reland, and includes an in-depth analysis of > countries, Germany, !ustralia and Chile. *he <%C3 ?or the <rganisation for %conomic Co-operation and 3evelopment@ is a group of countries, including reland, which acts as a forum for governments to work together to develop and co-ordinate policy across a broad range of areas in order to address prevailing economic and social challenges. t has published a number of guidelines and reports in the area of corporate governance, including its 6rinciples of Corporate Governance+ Good 6ractice Guidance on nternal Controls, %thics, and Compliance+ Guidelines on Corporate Governance of :tate-<wned %nterprises+ and Guidelines for $ultinational %nterprises. For a link to the <%C34s *he "ole of nstitutional nvestors in 6romoting Good Corporate Governance, please click here.&ew Corporate Governance Code for the rish Funds ndustry!s we mentioned last year in this )ulletin, the rish funds industry is now to be sub'ect to its own new corporate governance code. n 3ecember, the Funds ndustry !ssociation ? F !@ issued the new Corporate Governance Code for Collective nvestment :chemes and $anagement Companies accompanied by a AFre5uently !sked BuestionsA document.*he voluntary code became effective on 1 Canuary 2/12 with a 12-month transitional period. !ccordingly, a statement of compliance with the code should be included in all accounts in respect of the period ending on or after 1 Canuary 2/12. *he code operates on a similar Acomply or e9plainA basis to other corporate governance codes.Corporate Governance Code ?1./1 $), !dobe 63F@F!B ?1./D $), !dobe 63F@For more information on the code, please click here.F"C4s "eview of Compliance with EF Corporate Governance and

:tewardship Codes<n 1D 3ecember 2/11, the EF4s Financial "eporting Council ?F"C@ published a report setting out the results of its review of compliance with the EF Corporate Governance Code and the EF :tewardship Code since the introduction of these codes in 2/1/.*he Corporate Governance Code, a discrete set of rules which sits alongside the #isting "ules and which deals specifically with corporate governance issues for listed companies in the EF, was introduced by the F"C in $ay 2/1/ to replace the Combined Code on Corporate Governance. *he rish :tock %9change ? :%@ announced its applicability to rish companies listed on the $ain :ecurities $arket of the :% from >/ :eptember 2/1/. *he :tewardship Code, which relates to institutional investors and their engagement with EF listed companies, was introduced by the F"C in Culy 2/1/. t is not applicable in reland and the :% have indicated in the past that it did not intend to introduce a similar code here.*he F"C4s recent report indicates that compliance with the Corporate Governance Code has been high. <ne of the somewhat controversial highlights of the new code was the recommendation that companies propose the annual re-election of all members of the board. 8owever, the report shows that G/0 of F*:% >./ companies ?e9cluding investment funds@ have adhered to this recommendation and have proposed annual reelection of their full board. *here has also been a high level of compliance with a number of other new recommendations contained within the code. n general terms, the F"C noted that where companies confess any non-compliance with the code ?the code operates on a Acomply or e9plainA basis@, in the case of the ma'ority of companies, the non-compliance relates only to one or two provisions.<ne negative comment however is that reporting by audit committees is still regarded as less than satisfactory.!s regards the new :tewardship Code, the F"C report that there are now 2>D signatories to the code, including asset managers, asset owners and service providers such as investment consultants and pro9y voting agencies. 8owever, it seems that there is not yet a consensus on whether this new code has had any meaningful impact on the 5uality of engagement by investors.For a link to the F"C report, please click here.F"C4s "eport on 8ow to AComply or %9plainA<n 1. February 2/12, the F"C published a report on what constitutes an e9planation for the purposes of the Acomply or e9plainA concept in the EF Corporate Governance Code. *he F"C drew a number of conclusions. n particular, the F"C concluded that a meaningful e9planation should7set the conte9t and background+provide a clear rationale for the deviation from the code4s provisions and one which is specific to the company+state what mitigating action the company is taking to maintain conformity with the relevant principle of the code and to address any additional risk+ andgive details of the timing aspects, that is whether the deviation was limited in time and when the company intends to conform again with the code4s provisions.!mong other matters, the report also suggests that the statements of the chairman, who plays an important role in the e9planation process, could be fuller than they are currently.For a link to the report, What Constitutes an %9planation under Comply-or-%9plain? "eport of 3iscussions between Companies and nvestors, please click here."evenue )riefing regarding 3irectors4 "emuneration!nyone invested in the area of corporate governance may be interested in a specific issue which was one of a number addressed in a briefing issued by the "evenue Commissioners in 3ecember in relation to the ta9 treatment of directors4 remuneration. *he "evenue referred to the practice of paying directors4 remuneration 4gross4 to a special purpose company incorporated for that purpose. *hey state that this arrangement does not release the paying company from its obligation to make the statutory deductions under the 6ay !s Hou %arn and Eniversal :ocial Charge systems in relation to the director4s remuneration, and neither

does such an arrangement bring the ta9ation of such remuneration outside the scope of the director4s charge to rish ta9 under :chedule % or the Eniversal :ocial Charge.For a link to the briefing, please click here.Central )ank #etter on "isk !ppetite :tatements for Credit nstitutions and nsurance Endertakings!s regards the banking and insurance sector, on I Canuary 2/12 the Central )ank of reland published a letter ?dated 22 3ecember 2/11@ in connection with the Corporate Governance Code for Credit nstitutions and nsurance Endertakings ?the new mandatory code, introduced by the Central )ank of reland in 2/1/, which imposes certain minimum core corporate governance standards on all credit institutions and insurance undertakings licensed or authorised by the Central )ank@. *he letter related to the risk appetite statement ?"!:@ re5uired by the corporate governance code and urges undertakings to e9amine their "!:s and to take account of the findings of a sample review of "!:s conducted by the Central )ank4s nsurance :upervision 3irectorate. *he review found that "!:s fell short of acceptable standards and identified a number of key areas for improvement which relate both to content and to the need for "!:s to be approved by the board of directors. For a link to the letter, please click here. Feedback on %uropean Commission Green 6aper on Corporate Governance n !pril 2/11, the %uropean Commission launched a public consultation on the framework of corporate governance across the %E. For a link to the %C4s Green 6aper, please click here. *he Green 6aper listed 2. 5uestions across a broad range of corporate governance issues from the skills of the board of directors to risk management. n &ovember, the %uropean Commission published a AFeedback :tatementA setting out the feedback received during such consultation from organisations, public authorities and individuals. For a link to the Feedback :tatement, please click here.*he ne9t step is for the %uropean Commission to consider whether any legislative proposals are re5uired as a result of the Green 6aper and the responses received. n general, the Feedback :tatement does not seem to suggest that there is any strong support for any proposals which would be considered by rish companies and their advisers to be controversial. Corporate Governance in ndia7 !ims and <b'ectivesCorporate governance, in plain terms, refers to the rules, processes, or laws by which businesses are operated, regulated, and controlled. *he term can refer to internal factors defined by the officers, stockholders or constitution of a corporation, as well as to e9ternal forces such as consumer groups, clients, and government regulations.8owever, an enforced corporate governance 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. *o that end, organi(ations have been formed at the regional, national, and global levels. n recent times, 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. !n 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.!ims and <b'ectives t is said that good corporate governance helps an organi(ation achieve several ob'ectives and some of the more important ones include7, 3eveloping appropriate strategies that result in the achievement of stakeholder ob'ectives, !ttracting, motivating and retaining talent, Creating a secure and prosperous operating environment and improving operational performance, $anaging and mitigating risk and protecting and enhancing the company-s reputation.:ome aspects covered in the poll include7,

Corporate governance regulations in ndia, Corporate governance concerns in ndia and role of independent directors and audit committees inaddressing these concerns, )oard practices, board oversight of risk management and the importance given to integrity and ethicalvalues, 6ractices that are fundamental to improved corporate governance. n comparison with developed countries that impose stringent penal and criminal conse5uences for poor corporate governance, penalty levels in ndia are considered to be inade5uate to enforce good governance. J1 percent of the respondents considered penalty levels to discipline poor and unethical governance to be low. 22 percent of the respondents were either undecided or did not know if the penalty levels are low.%nforcing Clause DI n recent years, more and more ndian companies have been raising capital overseas by getting themselves listed on international stock e9changes. *hese efforts have been accompanied by the ndian government4s drive to attract more Foreign 3irect nvestment ?F3 @. )oth factors have gone hand in hand with the reali(ation that if ndian companies want more access to global capital markets, they will need to make their operations and financial results more transparent. n other words, they will need to improve their standards of corporate governance.*he :ecurities and %9change )oard of ndia ?:%) @, which regulates ndia4s stock markets, took a ma'or step in this direction a year ago. t asked ndian firms above a certain si(e to implement Clause DI, a regulation that strengthens the role of independent directors serving on corporate boards. 8ave these steps made a difference to corporate governance in ndian firms?Corporate :ocial "esponsibilityCorporate :ocial "esponsibility ?C:"@ is a concept through which organi(ations consider the interests of society by taking responsibility for the impact their activities have on customers, suppliers, employees, communities and the environment. *his responsibility goes beyond compliance with regulations and is about organi(ations voluntarily taking further steps to improve the 5uality of life for employees as well as for the local community and society at large.DJ percent of the respondents believe that C:" is not high on the agenda of ndian companies. *hirty percent of the respondents were undecided on this aspect. ntegrity and %thical ;alues ndian companies have been focusing on code of conduct and whistle blower mechanism as a fundamental of good governance. "espondents were asked if similar importance was given to integrity and ethical values. $a'ority of the respondents say that although ndian companies give similar importance to integrity and ethical values, significant scope e9ists to enhance integrity and ethical values within the organi(ation and the eco-system.%ffectiveness of Corporate Governance$onitoring the effectiveness of corporate governance practices is also a key concept emerging in ndia. We asked respondents who should monitor the effectiveness of corporate governance practices. Forty-seven percent of the respondents believe that effectiveness of corporate governance should be monitored by way of corporate governance audits carried out by corporate governance specialists. *wenty-si9 percent of the respondents believe that it should be monitored by the boards themselves through self-assessment tools. Fifteen percent of the respondents believe that the monitoring should be by way of investors K minority shareholder groups having access to full information and another 12 percent believed that the monitoring should be through rating agencies.Factors *o mprove Corporate Governance, G. percent of the respondents think that the remuneration of Chief %9ecutive<fficers ?C%<@ should be significantly linked to company performance, $ost respondents believe that while steps at introducing the code of conductand whistle blower policy have been introduced, there e9ists a significant needto enhance integrity and ethical values in the larger eco-system, J2 percent of the respondents believe it is necessary for an

independent andtransparent process to evaluate performance of board members, *wothirds believe that e9clusive sessions of independent directors are essential, DJ percent feel that the effectiveness of corporate governance should bemonitored through audits by corporate governance specialists.Government-s nitiatives*he $inistry of Corporate !ffairs has proposed the &ew Companies )ill 2//G which aims to improve corporate governance by vesting greater powers in shareholders. *hese have been balanced by greater emphasis on self-regulation, minimi(ation of regulatory approvals and increased and more transparent disclosures. .> percent of the respondents believe that the new Companies !ct might have a limited or insignificant impact in addressing contemporary corporate governance issues in ndia. 2G percent of the respondents believe that its impact is likely to be positive. *he remaining 1I percent were undecided. n <ctober 2/11, the $inistry of Corporate !ffairs said it was in favor of introducing a corporate governance inde9 that would offer rankings to companies adopting governance standards. *he inde9 would offer rankings for corporate houses adopting governance standards.*he $inistry was keen to introduce a corporate governance policy to take forward the government4s efforts towards better governance in companies. t had been worked out and the competition law would be revisited and amendments would be introduced soon.:upreme Court-s ;erdict n $ay 2/11, the :upreme Court has given a very fair 'udgment, with far-reaching implications both for the government and ndia nc., in the "eliance ndustries #imited ?" #@ vs "&"# gas pricing case. t has established une5uivocally that the production sharing contract between the government and " # overrides any private memorandum of understanding arrived at between two individuals. n short, it refused to give sanctity to the $emorandum of Enderstanding ?$oE@ signed between the two !mbani brothers. *his principle had to be established in the interest of corporate governance or it would have created havoc in the corporate world with promoters of public limited, 5uoted companies coming together and signing $oEs without a care for the shareholders and other stake holders in the company. *ill today the shareholders have not okayed the $oE entered into between $ukesh and !nil !mbani when they divided between themselves the empire created by their father, 3hirubhai !mbani.*he second important aspect of the 'udgment is that the natural resources of a country belong to the government and the government has the right to price it and prioriti(e the beneficiaries. While it is a well known fact, even internationally, that natural resources belong to the government, the government as a monopoly has the sacred responsibility to put the interest of the nation before everything else when deciding on its use and sale price. *his is where the 'udgment has implications that go beyond the !mbani brothers. *he petroleum minister has e9pressed his happiness that the ape9 court has upheld his contention that the gas in this case belongs to the government and " # is only a contractor who can market the product. )ut it will be the government that will decide at what price it should market it, and to whom it should market it. *his is a double-edged sword. C<"6<"!*% G<;%"&!&C% & &3 !76!:*,6"%:%&*LFE*E"% C8!6*%" 7 &*"<3EC* <&Corporate governance is concerned with set of principles, ethics, values, morals, rules regulations, L procedures etc. Corporate governance establishes a system whereby directors are entrusted with duties and responsibilities in relation to the direction of the company-s affairs.*he term MgovernanceN means control i.e. controlling a company, an organi(ation etc or a company L corporate governance is governing or controlling the corporate bodies i.e.

ethics, values, principles, morals. For corporate governance to be good the manager needs to meet its responsibilities towards its owners ?shareholders@, creditors, employees, customers, government and the society at large. Corporate governance helps in establishing a system where a director is showered with duties and responsibilities of the affairs of the company.For effective corporate governance, its policies need to be such that the directors of the company should not abuse their power and instead should understand their duties and responsibilities towards the company and should act in the best interests of the company in the broadest sense.*he concept of Ocorporate governance- is not an end+ it-s 'ust a beginning towards growth of company for long term prosperity.C8!6*%" P 8 :*<"H L &%%3 <F C<"6<"!*% G<;%"&!&C%Corporate governance concept emerged in ndia after the second half of 1II= due to economic liberali(ation and deregulation of industry and business. With the changing times, there was also need for greater accountability of companies to their shareholders and customers. *he report of Cadbury Committee on the financial aspects of corporate Governance in the E.F. has given rise to the debate of Corporate Governance in ndia.&eed for corporate governance arises due to separation of management from the ownership. For a firm success, it needs to concentrate on both economical and social aspect. t needs to be fair with producers, shareholders, customers etc. t has various responsibilities towards employees, customers, communities and at last towards governance and it needs to serve its responsibilities at the best at all aspects.*he Mcorporate governance conceptN dwells in ndia from the !rthshastra time instead of C%< at that time there were kings and sub'ects. *oday, corporate and shareholders replace them but the principles still remain same, unchanged i.e. good governance.2/th century witnessed the glossy of ndian %conomy due to liberali(ation, globali(ation, and privati(ation. ndian economy for the 1st time here was together with world economy for product, capital and lab our market and which resulted into world of capitali(ation, corporate culture, business ethics which was found important for the e9istence of corporation in the world market place.C8!6*%" 7 3 FF%"%&* 3%F & * <&: <F C<"6<"!*% G<;%"&!C%1. Cadbury CommitteeQ1R ? E.F.@, 1II2 has defined corporate governance as such 7 MCorporate governance is the system by which companies are directed and controlled. t encompasses the entire mechanics of the functioning of a company and attempts to put in place a system of checks and balances between the shareholders, directors, employees, auditor and the management.N2. MCorporate governance is the system by which business corporations are directed and controlled. *he corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and spells out the rules and procedures for making decisions on corporate affairs. )y doing this, it also provides this+ it also provides the structure through which the company ob'ectives are set, and the means of attaining those ob'ectives and monitoring performance.N Q2R>. 3efinition of corporate governance by the nstitute of Company :ecretaries of ndia is as under 7MCorporate Governance is the application of best $anagement practices, Compliance of law in true letter and spirit and adherence to ethical standards for %ffective $anagement and distribution of wealth and discharge of social "esponsibility for sustainable development of all stakeholdersN. Q>RC8!6*%" ;7 "<#% <F #! W & C<"6<"!*% G<;%"&!&C%#aw can only provide a minimum code of conduct for proper regulation of human being or company.QDR #aw is made not to stop any act but to ensure that if you do that act, you will face such conse5uences i.e. good for good and bad for bad. *hus, in the same manner, role of law in corporate governance is to

supplement and not to supplant. t can not be only way to govern corporate governance but instead it provides a minimum code of conduct for good corporate governance. #aw provides certain ethics to govern one and all so as to have ma9imum satisfaction and minimum friction. t plays a complementary role. "ole of law in corporate governance is in Companies !ct which imposes certain restrictions on 3irectors so that there is no misrepresentation of documents, there is no e9cessive of power, so that it imposes duty not to make secret profit and make good losses due to breach of duty, negligence, etc, duty to act in the best interest of the company etc.C8!6*%" ;7 6%":6%C* ;%: <F C<"6<"!*% G<;%"&!&C%)efore dealing with Operspectives- of corporate governance lets understand what is meant by the term Operspective-. <9ford !dvanced #earner 3ictionary defines the term perspective as7-1. O*he !rt of drawing solid ob'ects on a flat surface so as to give the right impression of their relative height, width, depth, distance, etc.-2. !pparent relation between different aspects of a problem. n simple terms it means Othe right impression-.$ainly we will deal with the perspectives of corporate governance from three points of view71. :hareholders ?Capital $arket@ P Control perspective2. <rgani(ation ?$anagement@ P Control perspective>. :takeholders - Control perspective1. :hareholders7 as providers of a risk capital have final control on resource allocation decisions.2. <rgani(ation7 have the main purpose is to control i.e. through skills, intelligence, innovation, ideas, professionalism etc. *herefore, here in this perspective, resource allocation decision should rest with them.>. :takeholders7 here, it says that for long term business, only shareholders value ma9imi(ation should not be seen as sole goal but it should be for well being of all groups with stake of long run of business and it should be goal of corporate governance.C8!6*%" ; 7 $6<"*!&* ::E%: & C<"6<"!*% G<;%"&!&C%*here are several important issues in corporate governance and they play a great role, all the issues are inter related, interdependent to deal with each other. %ach issues connected with corporate governance have different priorities in each of the corporate bodies.*he issues are listed as below71. ;alue based corporate culture2. 8olistic view>. Compliance with lawsD. 3isclosure, transparency, L accountability.. Corporate governance and human resource management=. nnovationJ. &ecessity of 'udicial reformsG. Globali(ation helping ndian companies to become global giants based on good corporate governance.I. #essons from Corporate failure1. ;alue based corporate culture7 For any organi(ation to run in effective way, it needs to have certain ethics, values. #ong run business needs to have based corporate culture. ;alue based corporate culture is good practice for corporate governance. t is a set of beliefs, ethics, principles which are inviolable. t can be a motto i.e. ! short phrase which is uni5ue and helps in running organi(ation, there can be vision i.e. dream to be fulfilled, mission and purpose, ob'ective, goal, target.2. 8olistic view7 *his holistic view is more or less godly, religious attitude which helps in running organi(ation. t is not easier to adopt it, it needs special efforts and once adopted it leads to developing 5ualities of nobility, tolerance and empathy.>. Compliance with laws7 *hose companies which really need progress, have high ethical values and need to run long run business they abide and comply with laws of :ecurities %9change )oard <f ndia ?:%) @, Foreign %9change "egulation !ct, Competition !ct 2//2, Cyber #aws, )anking #aws etc.D. 3isclosure, transparency, and accountability7 3isclosure, transparency and accountability are important aspect for good governance. *imely and accurate information should be disclosed on the matters like the financial position, performance etc. *ransparency is needed in order that government has faith in corporate bodies and conse5uently it has reduced

corporate ta9 rates from >/0 today as against IJ0 during the late 1IJ/s. *ransparency is needed towards corporate bodies so that due to tremendous competition in the market place the customers having choices don-t shift to other corporate bodies... Corporate Governance and 8uman "esource $anagement7 For any corporate body, the employees and staff are 'ust like family. For a company to be perfect the role of 8uman "esource $anagement becomes very vital, they both are directly linked. %very individual should be treated with individual respect, his achievements should be recogni(ed. %ach individual staff and employee should be given best opportunities to prove their worth and these can be done by 8uman "esource 3epartment. *hus in Corporate Governance, 8uman "esource has a great role.=. nnovation7 %very Corporate body needs to take risk of innovation i.e. innovation in products, in services and it plays a pivotal role in corporate governance.J. &ecessity of Cudicial "eformQ.R7 *here is necessity of 'udicial reform for a good economy and also in today-s changing time of globali(ation and liberali(ation. <ur 'udicial system though having performed salutary role all these years, certainly are becoming obsolete and outdated over the years. *he delay in 'udiciary is due to several interests involved in it. )ut then with changing scenario and fast growing competition, the 'udiciary needs to bring reforms accordingly. t needs to speedily resolve disputes in cost effective manner.G. Globali(ation helping ndian Companies to become global giants based on good governance7 n today-s age of competition and due to globali(ation our several ndian Corporate bodies are becoming global giants which are possible only due to good corporate governance.I. #essons from Corporate FailureQ=R7 %very story has a moral to learn from, every failure has success to learn from, in the same way, corporate body have certain policies which if goes as a failure they need to learn from it. Failure can be both internal as well as e9ternal whatever it may be, in good governance, corporate bodies need to learn from their failures and need to move to the path of success.C8!6*%" ; 7 C<"6<"!*% G<;%"&!&C% & &3 ! 6!:*, 6"%:%&* L FE*E"%Good corporate governance in the changing business environment has emerged as powerful tool of competitiveness and sustainability. t is very important at this point and it needs corporation for one and all i.e. from C%< of company to the ordinary staff for the ma9imi(ation of the stakeholders- value and also for ma9imi(ation of pleasure and minimi(ation of pain for the long term business.Global competitions in the market need best planning, management, innovative ideas, compliance with laws, good relation between directors, shareholders, employees and customers of companies, value based corporate governance in order to grow, prosper and compete in international markets by strengthen their strength overcoming their weaknesses and running them effectively and efficiently in an efficient and transparent manner by adopting the best practices.Corporate ndia must commit itself as reliable, innovative and prompt service provider to their customers and should also become reliable business partners in order to prosper and to have all round growth.Corporate Governance is nothing more than a set of ideas, innovation, creativity, thinking having certain ethics, values, principles etc which gives direction and shape to its people, employees and owners of companies and help them to flourish in global market. ndian Corporate )odies having adopted good corporate governance will reach themselves to a benchmark for rest of the world+ it brings laurels as a way of appreciation. Corporate governance lays down ethics, values, and principles, management policies of a corporation which are inculcated and brought into practice. *he importance of corporate governance lies in promoting and maintains integrity, transparency and accountability throughout the organi(ation.Corporate governance

has e9isted since past but it was in different form. 3uring ;edic times kings used to have their ministers and used to have ethics, values, principles and laws to run their state but today it is in the form corporate governance having same rules, laws, ethics, values, and morals etc which helps in running corporate bodies in the more effective ways so that they in the age of globali(ation become global giants.:everal ndian Companies like 6epsiCo, nfuses, *ata, Wipro, *C:, and "eliance are some of the global giants which have their flag of success flying high in the sky due to good corporate governance.*oady, even law has a great role to play in successful and growing economy. Government and 'udiciary have enacted several laws and regulations like :%) , F%$!, Cyber laws, Competition laws etc and have brought several amendments and repeal the laws in order that they don-t act as barrier for these corporate bodies and developing ndia. Cudiciary has also helped in great way by solving the corporate disputes in speedy way.Corporate bodies have their aim, values, motto, ethics and principles etc which guide them to the ladder of success. )ig and small organi(ations have their maga(ines annual reports which reflect their achievements, failure, their profit and loss, their current position in the market. ! few companies have also shown awareness of environment protection, social responsibilities and the cause of upliftment and social development and they have deeply committed themselves to it. *he big e9ample of such a company can be of 3eepak Fertili(ers and 6etrochemicals Corporation #imited which also bagged 2nd runner up award for the corporate social responsibility by business world in 2//..Ender the present scenario, stakeholders are given more importance as to shareholders, they even get chance to attend, vote at general meetings, make observations and comments on the performance of the company.Corporate governance from the futuristic point of view has great role to play. *he corporate bodies in their corporate have much futuristic approach. *hey have vision for their company, on which they work for the future success. *hey take risk and adopt innovative ideas, have futuristic goals, motto, and future ob'ectives to achieve.With increase in interdepence and free trade among countries and citi(ens across the globe, internationally accepted corporate governance standards are of paramount importance for ndian Companies seeking to distinguish themselves in global footprint. *he companies should always keep improving, enhancing and upgrading themselves by bringing more reliable integrated product and service 5uality. *hey should be more transparent in their conduct.Corporate governance should also have approach of holistic view, value based governance, should be committed towards corporate social upliftment and social responsibility and environment protection. t also involves creative, generative and positive things that add value to the various stakeholders that are served as customers. )e it finance, ta9ation, banking or legal framework each and every place re5uires good corporate governance.8ence corporate governance is a means and not an end, corporate e9cellence should be end.C8!6*%" ; 7 :E$$!"H*he concept of corporate governance hinges on total transparency, integrity and accountability of the management and the board of directors. *he importance of Corporate Governance lies in its contribution both to business prosperity and to accountability. n the age of globali(ation, global competition, good corporate governance helps as a great tool for corporate bodies. t e9isted from ;edic times as the 8ighest standards in !rtha:hastra to today-s set of ethics, principles, rules, regulations, values, morals, thinking, laws etc as good corporate governance.Corporate Governance is a means not an end, Corporate %9cellence should be the end. <nce, the good Corporate Governance will be achieved, the ndian Corporate )ody will shine to outshine the whole world.