CORPOTARE GOVERNANCE PRINCIPLES

World Bank on Corporate Governance Contemporary Discussions Essence of the Three Documents Principles Ensuring Basis for an Effective CG Framework Rights and Equitable Treatment of the Shareholders The Equitable Treatment of the Shareholders Interests of Other Stakeholders Role of Stakeholders in CG Integrity and Ethical Behavior Disclosure and Transparency

3. WORLD BANK ON CG WB suggests that Corporate Governances principles are based on four unavoidable for governance aspects: Accountability Responsibility: (SRB emerges) Transparency; and Fairness. OR RAFT

4. CONTEMPORARY DISCUSSION
Contemporary discussions of Corporate Governance suggest principles raised in three documents released since 1990: The Cadbury Report (1992, UK) The Principles of Corporate Governance (OECD-1998 and 2004); and The Sarbanes-Oxley Act of 2002

5. ESSENCE OF THE THREE DOCUMENTS

The Cadbury and OECD reports deal with general Corporate Governance principles: RAFT plus other CG principles or governance pillars that have been discussed earlier The Sarbanes-Oxley Act (SARBOX) happens to be an initiative by the US federal Government to consider several principles of the above documents and legislate those.

6. PRINCIPLES
Following are the major principles that are important for CG to be in place. Note that the Principles cover all stakeholders and underlines the responsibilities of the BOD. In addition, those emphasize on business integrity, ethical business, transparency and several other issues.

7. Ensuring the Basis for an Effective Corporate Governance Framework The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities.

8. RIGHTS AND EQUITABLE TREATMENT OF THE SHAREHOLDERS

Organizations should respect the rights of the shareholders Organizations should help shareholders exercise their rights How? Companies should share all relevant information with the shareholders and take their views and formulate company strategy accordingly Companies should ensure optimal participation of the shareholders in decision making through different means, such as encouraging shareholders to participate in general meetings Companies should ensure optimal participation of the shareholders in decision making bodies (Supervisory Board, Governing Body, Board of Directors, etc.)

WHAT OTHER MEANS OF PARTICIPATION STUDENTS MAY SUGGEST?

9. THE EQUITABLE TREATMENT OF SHAREHOLDERS

Briefly, the corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights.

10. INTERESTS OF OTHER STAKEHOLDERS

Non-shareholder stakeholders include, among others: Employees Investors Creditors Suppliers Local Communities Customers Policy Makers; etc.

11. INTERESTS OF OTHER STAKEHOLDERS

The companies are linked to other stakeholders in various ways: Production Supply Marketing Transportation Raw materials Security In other words, companys profit making, operation, strategy formulation and implementation, etc. depend on the protection of stakeholder interests.

12. INTERESTS OF OTHER STAKEHOLDERS

Hence, the companies should recognize that they have enormous obligations to non-shareholderstakeholders, such as: Legal Contractual Social Market driven

13. THE ROLE OF STAKEHOLDERS IN CG

The corporate governance framework should recognize the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.

14. ROLE AND RESPONSIBILITIES OF THE BOARD

The Board as a policy making forum should behave responsibly, intelligently and transparently The Board should work in a participatory manner: not only shareholder, but also other stakeholder, including community participation in suitable manner: in terms of direct and indirect participation The size of the board should be appropriate to include representation from diverse stakeholders Boards should have sufficient skills, authority, competence, courage and understanding to review and challenge, if needed, the management performance The Boards should function more or less independently with commitment

15. INTEGRITY AND ETHICAL BEHAVIOR

The companies should never compromise when the question of integrity arises Integrity: personal, professional, individual, corporate, social, communal, financial, moral, should be the fundamental criteria in selecting the corporate officers and Board members Companies must develop a Code of Conduct/Code of Ethics and, if feasible, form an Ethics Committee, involving the stakeholders, to monitor the level of integrity of the Board and corporate officers and should devise mechanism to address any violation of the codes by respective persons.

16. DISCLOSURE AND TRANSPARENCY

Companies should ensure highest level of transparency via means a different means as part of their accountability to the stakeholders Companies should make the composition, roles and responsibilities, and major performances of the Board and the management publicly known Companies should make publicly known the performance of the company itself Timely financial reporting is one of the CG urgent task, which the companies should perform Company should ensure that all investors have access to appropriate factual information Disclosure of material matters concerning the organization should be timely and balanced

17. LITERATURE
Cadbury Reports Sarbanes-Oxley Act OECD Principles on Corporate Governance 2004