Corporate Governance in INDIA

Role of Board of Governors

Legislative power; to formulate bylaws for the company ;draw new policies for business and employees Executive power; to appoint executive and empower them to the planned tasks. Judicial power; to attend grievances not solved at managerial level and take appropriate action

Objective of corporate governance

A properly structured board to take independent and responsible decisions ;clearly defined powers , board meetings and board independence. The board is to be represented by an adequate number of executive and non executive directors , who will represent the interests of all the stakeholders;Appointment of qualified and skilled persons to the board

Objective of corporate governance contd.

It takes transparent decisions and adopts such procedures that are un ambiguous It has effective machinery and policy instruments to safeguard the interests of the stake holders ; code of conduct It informs the share holders of all the relevant developments; strategies , risk management ; operational reporting, and audit

Objective of corporate governance contd.

It is always vigilant and monitors the functioning of the management ; operational reporting. It remains in effective control of the company at all times ; Board independence

Emergence of corporate governance code

Enrons , Bigbulls etc lead to many issues. To fill gap mandatory and non mandatory stipulations came.

Stewards of corporate Governance

Ministry of corporate affairs Securities and exchange board of India National Federation for corporate governance The Institute of charted accountants of India The institute of company secretaries of India Association of chamber of commerce and industry

Stewards of corporate Governance

The confederation of indian industry Federation of indian chambers of commerce and industry

Misgovernance and corruption

Issues industrial licences, import licences,money abroad , corruption culture, Tax evasion ,scandals Need : need to regulate corporate governance came and CII was formed in 1996-98 1999 SEBI appointed committee to recommend corporate governance code- all listed companies came under SEBI and Code

Features of good governance

Role and powers of the board; The board takes responsibility for the policies and decisions of the company . It clearly identifies roles ,responsibilities, and accountability of the directors, executives, and managers. Legislation;The board must function under the legislative and regulatory framework to render effective governance

Features of good governance

Code of conduct ; The code of conduct of the organisation is issued to all, from the directors to the executives , down to employees and investors. It must be clearly understood by all the stakeholders and there should be a periodic review and evaluation of it.

Features of good governance

Board Independence ; Independent and professional governance is the cornerstone for good administration. The board is also capable of objectively assessing the management and the commercial activity of the company.

Features of good governance

Board skills; the board members must posses diverse qualities.therory,technical, financial, govt functioning knowledge, legal ,operational expertise Management environment ; openness ,freedom, adventure creates high motivation and clear objectives

Features of good governance

Board positions ; selection must be based on the highly competent Board induction and training ; directors must be knowledgeable about all the governance issues. Board meeting ; the meetings must be planned ,the agenda discussed before hand, and the minutes maintained professionally.

Features of good governance

Strategy setting ; short and long term strategy setting must be documented.These must be achievable and must have measurable performance targets and milestones Business and community obligations ; corporations are public persons and they can not function outside of society.society must be aware of the companys plans and the way it carry out.

Features of good governance

Financial and operational reporting;; mandatory and non-mandatory gudielines which company must comply with SEBI. Audit committee; it is responsible for the examination of the financial health of the company and monitors the internal auditors.it discharges duties impartially with out conflict of interest and presents an objective picture of the financial status of the company.

Features of good governance

Risk Management ; the procedure must be clearly laid down to identify , analyse and measure risks. The board is ultimately responsible for all the risks it takes and is answerable to the shareholders.