Quiz:

Using phrases give the ff:

1.economic objectives of the
business (8)
2. Social objectives of the
business (8)
3. 3 Difference of non economic
and economic activity (6)
4. 2 characteristic of each form
of business organization (8)
 CORPORATE
GOVERNANCE

Corporate Governance is the

application of best
management practices
Four Pillars of Corporate
Governance

Accountability
Fairness
Transparency
Independence
Pillars of Corporate Governance
These are critical in
successfully running an
entity and forming solid
professional relationships
among its stakeholders
Corporate Governance
 Effective management of relationships
among stakeholders

– Shareholders - Managers
– Board of directors - employees
– Customers - Creditors
– Suppliers - community
Fairness
Refers to equal treatment,
for example, all shareholders should receive equal
consideration for whatever shareholdings they
hold.

Fairness in the treatment of all

stakeholders including employees,
communities and public officials.
The fairer the entity appears to stakeholders, the more
likely it is that it can survive the pressure of interested
parties.
Accountability

Obligation and responsibility to give

an explanation or reason for the
company’s actions and conduct.
( balanced and understandable
assessment )of position and
prospects;
 Accountability
 Ensure
that management is
accountable to the Board

 Ensurethat the Board is accountable

to shareholders
 Accountability

 The board is responsible for

determining the nature and extent
of the significant risks it is willing to
take;
 Accountability–board of directors
 maintain sound risk management and
internal control systems;
 Establish formal and transparent
arrangements for corporate reporting
and risk management and for
maintaining an appropriate
relationship with the company’s
auditor, and
Accountability
The board should communicate with
stakeholders at regular intervals, a
fair, balanced and understandable
assessment of how the company is
achieving its business purpose.
 Accountability
Ensure that management is
accountable to the Board

Ensure that the Board is

accountable to shareholders
Accountability
What is the importance of
accountability?
Transparency

Ensure timely, accurate

disclosure on all material
matters, including the
financial situation,
performance, ownership
and corporate governance
 Principles of Corporate
Governance
Sustainable development of all
stake holders- to ensure growth
of all individuals associated with
or effected by the enterprise on
sustainable basis
 Principles of corporate governance

 Effective management and

distribution of wealth – to
ensue that enterprise creates
maximum wealth and uses the
wealth so created for providing
maximum benefits to all stake
holders and enhancing its wealth
creation capabilities to maintain
sustainability
Good Board Practices
Clearly defined roles and
authorities
Duties and responsibilities of
Directors understood
Board is well structured
Appropriate composition and
mix of skills
Good Board procedures
Appropriate Board
procedures
Director Remuneration in
line with best practice
Board self-evaluation and
training conducted
Control Environment
Internal control procedures
Risk management framework
present
Disaster recovery systems in
place
Media management techniques in
use
 Control Environment
Businesscontinuity
procedures in place

Independent external auditor

conducts audits

Independent audit committee

established
Control Environment

Internal Audit Function

Management Information
systems established
Compliance Function
established
 Transparent Disclosure
Financial Information
disclosed
Non-Financial Information
disclosed
Financials prepared
according to Reporting
Standards
Transparent Disclosure
Companies Registry filings up
to date
High-Quality annual report
published
Web-based disclosure
Well-Defined Shareholder Rights
Minority shareholder rights
formalized
Well-organized shareholder
meetings conducted
Policy on related party
transactions
Well-Defined Shareholder
Rights

Policy on extraordinary
transactions
Clearly defined and explicit
dividend policy
 Board Commitment
 TheBoard discusses corporate
governance issues and has created a
corporate governance committee
 The
company has a corporate governance
champion
A corporate governance improvement plan
has been created
 Appropriateresources are committed to
corporate governance initiatives
 Board Commitment

Policiesand procedures have

been formalized and distributed
to relevant staff
A corporate governance code has
been developed
Board Commitment
A code of ethics has been
developed
The company is
recognized as a corporate
governance leader
 Other Entities
 Corporate Governance applies to all
types of organizations not just
companies in the private sector but
also in the not for profit and public
sectors
 Examples are NGOs, schools,
hospitals, pension funds, state-owned
enterprises
Case Study: P31 Peoples Recovery,
Empowerment, and Development
Assistance

 1. What is meant by fairness?

 2. How can trade and commerce be
fair?
 In what ways is PREDA PROMOTING
fairness?
Prepare reflection

Thank You