CORPORATE

GOVERNMENT

PRINCIPLES OF MANAGEMENT AND FINANCE

A
PROJECT
ON
CORPORATE GOVERNMENT
PRESENTED
TO
THE PRINCIPLE ELPHINSTONE COLLEGE
DR(SMT)P.S.JADHAV
UNDER THE GUIDANCE OF
PROF.P.N.ALWANI
BY
RUMANA KHAMISA.57
S.Y.BCOM-1

GUIDING PROF
PROF.P.N.ALWANI

HOD COMMERCE
PROF.(SMT)
R.N.VYAS

CONTENT

MEANING
Corporate Governance may be defined as a set of rules , regulations , procedures and
practices to be adopted by a firms management
to manage its affairs in the best interest of its stakeholders like (shareholders , investors ,
employees ,customers , suppliers and others).

on particular ,the essence of corporate governance is to make sure

that the management should focus on the key shareholders
objective-wealth maximisation .

MERITS

DEMERITS

Relationship with shareholders : Relationship

Corporation Live & die by

decision of its board of
directors :-sentimental
business decision
Family-Owned Companies :
influence the decision
(ex. Satyam ltd.)
Easily Corruptible : lack of
Govermental oversight
Cost of Monitoring : need to
pour money to stay in
power

helps to sustain business for longer period

Management : Assess to outsiders on how well Corp
governance is being governed.
Transparency : Attaining the Trust of stakeholders,
improving access to capital & Financial markets.
Benefits to Shareholders : Shareholder have
greater security on Investment they have made.
Informs on important decisions of managements.
Benefits to National Economy : Good flow in
Capital, Important factor to bring in Investment.

Government
issues affecting
board

SOCIAL RESPONSIBILITY

concept of social responsibility:-

-Proposes that a private firm has

responsibilities to society that
extend beyond making a profit
-Obligation of firm decision makers
to make decisions & act in ways that
recognize the interrelatedness of
business & society.
-It recognizes the existence of
various stakeholders and firms
deal with them

THE FOUR RESPONSIBILITY:-

ECONOMIC:Produce goods & services of value

to society so that the firm may
repay its creditors and stockholders
Be profitable

LEGAL:Defined by governments
laws that management is
expected to obey

THICAL:Follow generally held beliefs about how

one should act in society
Work with employees & community
in planning for layoffs, though no
laws requiring this
Many people expect firms to do
these things

Making sure everything

is done ethically , within
reason of course

DISCRETIONARY:Purely voluntary obligations a firm

assumes
Philanthropic contributions,
training hard-core
unemployed, providing daycare centers, etc.
Many people do not expect
firms to do these things

CASE STUDY
BAJAJ AUTO LTD
CORPORATE GOVERNANCE POLICIES & PRACTICES FOR 2006-07

Total 16 directors and chairman

executive
Chairman executive therefore 50%
non-executive , independent
director required i.e 8

AUDIT COMMITTEE ROLE:The Audit Committee met 4 times. This committee reviewed the
financial statements of each unlisted Indian Subsidiary Company
: Bajaj Auto Holdings Ltd Bajaj Allianz General Insurance Ltd.
Bajaj Allianz Life Insurance Ltd.

SHAREHOLDER COMMUNICATION:-

Shareholder & Investor Grievance Committee has been setup.

This committee specifically looks into Shareholders & Investors
complaints on matters relating to transfer of shares, non-receipt
of annual report, non-receipt of dividend etc. They met on 17th
March 2007 to review the status of Investors services rendered.

BOARD ROLE BOD:met 6 times in a year & gap between any 2 meetings has been
less than 3mths. A sitting fee of Rs. 20,000 per meeting is paid
to non-executive directors, including independent directors. This
has been fixed by the BOD. None of the Directors was a member
in more than 10 committees, nor a chairman in more than five
committees across all companies in which he/she was Director.
Full Disclosure has been made regarding the Remuneration
Packages of all Directors.

REMUNERATION PACKAGES TO
THE DORECTORS:CEO/CFO
CERTIFICATION

The CEO and CFO

have certified to
the board with
regard to the
financial
statements and
other matters as
required by the
clause 49 of the
listing agreement.

AUDIT COMMITTEE
COMPOSITION:NAME OF DIRECTOR

-Nanoo Pamnani Naresh Chandra

S H Khan, Chairman J N Godrej D j
Balaji Rao
-Such a committee was setup
All its members are independent,
non-executive directors and are
financially literate as required by
clause 49, moreover Khan, Rao &
Godrej have accounting or related
financial management expertise.
-The Company Secretary acted as
the secretary to this committee.
ATTENDANCE 4/4 4/4 2/4 4/4 3/4

CRITICAL
INFORMATION:-Senior Mgt. made
periodical disclosures to
the board relating to all
material, financial and
commercial
transactions.
-P Murari & Niraj Bajaj
have been appointed as
directors & brief profile
of them are mentioned
in the notice issued to
the shareholders .
-Directors have also
disclosed their
membership with other
committees of the
Board.

CONCLUSION
Good corporate governance may no the the engine of economic
growth, but it is essential for the proper functioning of the engine.
The investors both National and International would be loyal to
invest in the Indian companies if they follow all the standards of
corporate governance practices.

From this presentation we also get to learn what is basically

Corporate Governance and why is it actually needed in companies.
We also learnt about the guidelines set by SEBI for Corporate
Governance. We studied a company Bajaj Auto Ltd especially the
section on Corporate Governance and tried to understand as to
how compliant they are in following the SEBI guidelines. We see
that in nearly 70% of the guidelines, Bajaj Auto is up to the mark.
In many of the other guidelines as well Bajaj Auto is working
towards achieving those guidelines.

-THE END