Professional Documents
Culture Documents
Faisal Rasheed
Corporate Governance
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed
Corporate Governance
There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom). In 2002, the U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance
Guardians of the Companys assets for the Shareholders who use the Companys assets
Managers
Corporate Governance
Primarily
concerned with public listed companies i.e. those listed on a Stock Exchange on preventing corporate collapses such as Enron, Polly Peck and the Maxwell companies
Focused
Accountability
Ensure
that management is accountable to the Board that the Board is accountable to shareholders
Ensure
Fairness
Protect Treat
Shareholders rights
Provide
Transparency
Ensure timely, accurate disclosure on all material matters, including the financial situation, performance, ownership and corporate governance
Independence
Procedures
and structures are in place so as to minimise, or avoid completely conflicts of interest Directors and Advisers i.e. free from the influence of others
Independent
Control
commitment
and responsibilities of Directors understood is well structured composition and mix of skills
Board
Appropriate
Board procedures
Control Environment
Internal Risk
control procedures
Disaster
Control Environment
Business
continuity procedures in place external auditor conducts audits audit committee established
Independent Independent
Control Environment
Internal
Management Compliance
Function established
Transparent Disclosure
Financial
Non-Financial Financials
Transparent Disclosure
Companies
High-Quality Web-based
disclosure
Well-organised Policy
Clearly
Board Commitment
Policies
and procedures have been formalised and distributed to relevant staff A corporate governance code has been developed A code of ethics has been developed The company is recognised as a corporate governance leader
Other Entities
Corporate
Governance applies to all types of organisations not just companies in the private sector but also in the not for profit and public sectors are NGOs, schools, hospitals, pension funds, state-owned enterprises
Examples
3. EXPERIENTIAL LEARNING
ASIA
3. Pakistan
First Code of Corporate Governance SECP With Assistance from; 1. ICAP 2. Stakeholders Sound Corporate Practices
3. EXPERIENTIAL LEARNING
ASIA
3. Pakistan
B: Applicable to: 1. Listed Companies 2. Banking Companies 3. NBFIs 4. Insurance Companies 5. Mutual Funds 6. Unit Trusts 7. Companies/Corporations held or controlled by the Government
3. EXPERIENTIAL LEARNING
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3. Pakistan
C: Constituents: 1. Directors BOD Qualifications and Eligibility Tenure Responsibilities, Powers and Functions of BOD Meetings Key Information
3. EXPERIENTIAL LEARNING
ASIA
3. Pakistan
C: Constituents: 2. CFO & Secretary Qualifications Attendance of Board Meetings 3. Corporate & Financial Reporting Framework Directors Report to Shareholders Frequency of Financial Reporting Responsibility for Financial Reporting & Corporate Compliance Disclosure of interest by a Director holding companys shares
3. EXPERIENTIAL LEARNING
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3. Pakistan
C: Constituents: 3. Corporate & Financial Reporting Framework Auditors not to hold shares Corporate ownership structure Divesture of shares by sponsors/controlling interest 4. Audit Committee Committee Frequency of meetings Attendance at meetings Terms of reference
3. EXPERIENTIAL LEARNING
ASIA
3. Pakistan