CORPORATE GOVERNANCE

Corporate Governance is a system by which companies are DIRECTED and CONTROLLED.

CORPORATE GOVERNANCE
In the past, Corporate Governance only consisted of : An annual general meeting once a year Accounts presented to shareholders once a year Accounts audited once a year Directors board meetings often frequently, but not always. Directors conversations and meetings frequently.

CORPORATE GOVERNANCE
Overtime , this minimal system of Corporate Governance was found to be completely INADEQUATE. This inadequacy of the system of CG was highlighted by large corporate failures( Enron and WorldCom). More recently, the banks get themselves into considerable difficulties. These were large international companies.

CORPORATE GOVERNANCE
In response to these scandals and others, the system of CG was completely tighten up.
However, an important question that arises is will the same way of managing companies be the best method for all companies. The answer is likely to be NO, as companies are different from each other and operate in different legal systems, frameworks and traditions.

CORPORATE GOVERNANCE
The key issue in CG is that a high degree of priority is placed on the interests of shareholders, who place their trust in corporations to use their investment funds wisely and effectively.

CORPORATE GOVERNANCE
The Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance. Fairness including foreign and minority shareholders Disclosure and transparency Independence Probity, honesty Responsibility and accountability Reputation Judgement Integrity

CORPORATE GOVERNANCE
Combined Code of Corporate Governance The Board should: Lead strategy Balance executive /non executive Meet regularly Separate the roles of Chairman & CEO Ensure rigorous /transparent nomination(nomination committee) Performance reviews annually Directors to submit for re-election Remuneration committee

CORPORATE GOVERNANCE
AUDIT COMMITTEE

Audit Committee plays a very important part of the Corporate Governance .The committee should be dominated by non executive directors

CORPORATE GOVERNANCE
AUDIT COMMITTEE
Review IA Review IC Special Investigations

Financial Statements

Scope of the EA Forum to link Dir/EA Deal with Auditors Reservations Obtain information for auditors

CORPORATE GOVERNANCE
AUDIT COMMITTEE

the main function are as follows Review the work of Internal Audit Review of the systems of Internal Control Special investigations Liaisons with external auditors Define the scope of external auditors Provide a forum to link directors and auditors Deal with auditions reservations/queries Obtains information for auditors

CORPORATE GOVERNANCE
Code of Corporate Governance and listed companies Companies , particularly those listed on the Stock Exchange, should comply with the code for the following reasons:
To ensure the best practice To ensure that management perform their duties and responsibilities efficiently and effectively The code provide guidance to management to act as the best agent to sharholders To provide guidance on how to avoid conflicting issues between management and shareholders The code give assurance to shareholders that management is acting in their best interest Potential investors are also reassured by the compliance to the Code The basic principle of the Code is comply or explain Improves the integrity of the companies and Stock Exchange

CORPORATE GOVERNANCE
Corporate Governance and External Auditors The code requires the external auditors to ensure rotation of member staff at regular interval , for instance , every five years. The main reason is avoid collusion between management and the audit staff to conceal irregularities or fraud. It also demonstrate to shareholders that the auditors rae taking reasonable steps to ensure objectivity in the performance of their work.