Corporate Governance policy in India

Group-2
SHRUTI SANGHVI PARITA SONI POOJA JAIN JINESH SHAH PRATIK CHOTALIA

AGENDA
INTRODUCTION

PRINCIPLES
HISTORY & NEED

DIFFERENT DEFINITIONS

PERSPECTIVES
IMPORTANT ISSUES SATYAM FIASCO
IN PUBLIC AND PRIVATE SECTOR

What is corporate governance?

Corporate governance refers to the set of systems,

principles and processes by which a company is governed.

They provide the guidelines :

how the company can be directed & controlled can fulfil its goals and objectives beneficial for all stakeholders in the long term

 Top to bottom. Since Vedic times. Tcs , Wipro, Reliance, Tata group and Infosys amongst the major India

companies having good corporate governance record.

Big and small organizations have their magazines annual reports

which reflect their achievements, failure their profit and loss, their current position in market.

Few companies have also shown awareness of environment

protection & social responsibilities.

Be it finance, taxation, banking or legal framework each and every

place requires good corporate governance.

What are the principles underlying corporate governance?

Conducting the business with all integrity and fairness. Being transparent with regard to all transactions. Making all the necessary disclosures and decisions. Complying with all the laws of the land. Accountability and responsibility towards the

stakeholders and Commitment to conducting business in an ethical manner.

Why is it important ?
Integrity: are the boards and management of companies carrying out their

duties in an ethical way ?

The bonus culture: better corporate governance in financial institutions and their remuneration policies have prevented the credit crunch and resulting financial crisis.

The regulatory framework:

introducing more regulation has clearly failed - we need better regulation.

Directors' training:

prevention is better than a cure, so including knowledge of the princples and practice of corporate governance in mainstream director training is essential.
http://www.applied-corporate-governance.com/importance-of-corporate-governance.html

HISTORY & NEED OF CORPORATE GOVERNANCE

The corporate governance concept dwells in India from the

Arthshastra time .
Corporate governance concept emerged in India after the second half of

1996 due to economic liberalization and deregulation of industry and business.

In 1992 Indian economy for the 1st time here was together with

world economy for product, capital and lab our market .

And which resulted into world of capitalization, corporate

culture, business ethics which was found important for the existence of corporation in the world market place.

DIFFERENT DEFINITIONS OF CORPORATE GOVERNACE

Cadbury Committee: (1992) Corporate governance is the system by which companies are directed and controlled. The Institute of Company Secretaries of Corporate Governance is the application of best Management practices, Compliance of law in true letter and spirit and adherence to ethical standards for Effective Management and distribution of wealth and discharge of social Responsibility for sustainable development of all stakeholders.

PERSPECTIVES OF CORPORATE GOVERNANCE

The perspectives of corporate governance from three points of view:

1. Shareholders (Capital Market) Control perspective

2. Organization (Management) Control perspective

3. Stakeholders - Control perspective

IMPORTANT ISSUES IN CORPORATE GOVERNANCE

1. Value based corporate culture 2. Holistic view 3. Compliance with laws 4. Disclosure, transparency, & accountability 5. Corporate governance and human resource management 6.Innovation 7. Necessity of judicial reforms 8. Globalization helping Indian companies to become global giants based on good corporate governance. 9.Lessons from Corporate failure

Corporate Governance Failure in India: Satyam Fiasco

Satyam : incorporated in 1987
as a private limited company providing :software development and consultancy

services. promoters of the company :Raju and his brother Rama Raju Before starting Satyam, they were involved in other businesses like construction and textiles.

Raju Confessed to Accounting Irregularities

On January 07, 2008, Raju made a shocking admission that for

several years, the revenues and profits of Satyam had been inflated, without the knowledge of the board, senior managers of the company, and the auditors.

Analysts believed that Raju's confession of the accounting fraud

had been prompted by DSP Merrill Lynch's termination as the advisors of Satyam.

How Does Corporate Governance Matter for Growth and Development?

The literature has identified several channels through which corporate governance affects growth and development:
Increased access to external financing by firms can lead, in turn, to larger

investment, higher growth, and greater employment creation.

Good corporate governance can be associated with a reduced risk of financial

crises,which is particularly important given that financial crises can have large economic and social costs.
Good corporate governance can mean generally better relationships with all

stakeholders, which helps improve social and labor relationships, helps address such issues as environmental protection, and can help further reduce poverty and inequality.

corporate governance in public and private sector

Private sector governance, i.e. governance in major listed

companies, has caught much public attention in recent years due to the collapses of major corporations around the world. The result has been a plethora of standards for corporate governance in public and private companies.
In comparison, public sector governance has avoided much of the

controversies while developing along a parallel, if dissimilar path of raised awareness of the need for governance standards in the public sector.

corporate governance in public and private sector

Private Sector

Authority : Board Responsibility : Legal Responsibility of board Independence :Legal Independence of board Selection and appointment of members Reporting :Annual Report to shareholders

Public Sector

Authority : Government Ministers Department Responsibility :Responsibility diffused Independence :Ministerial control Reporting :Ministers of Parliament, Auditor general, Agency Heads

SUMMARY

The concept of corporate governance hinges on total transparency, integrity and accountability of the management and the board of directors. In the age of globalization, global competition, good corporate governance helps as a great tool for corporate bodies. It existed from Vedic times as the Highest standards in ArthaShastra to todays set of ethics, principles, rules, regulations, values, morals, thinking, laws etc as good corporate governance.

Corporate Governance is a means not an end, Corporate Excellence should be the end. Once, the good Corporate Governance will be achieved, the Indian Corporate Body will shine to outshine the whole world.

THANK YOU