Class Notes on Corporate Governance
CORPORATE GOVERNANCE
What is Corporate Governance?
It is a set of systems, principles and processes by which a company is governed. It provides guidelines as to how the company can be directed or controlled so that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial to all the stakeholders in the long run.
The term was first used by Robert Ian in his book in the year 1984.
It addresses the issues facing the Board of Directors such as interaction between top management and the relationship with the owners and others interested in the affairs of the company.
Cadbury committee defined Corporate Governance as a) It is fulfilling strategic goals of owners b) Employee Welfare c) Consideration of the environment and the community d) Maintain relations b/w the customers and suppliers e) Compliance with legal and regulatory requirements
As per Desirable Corporate Governance Code, 1998
CG deals with laws, procedures, practices and rules that determines a company’s ability totake good managerial decisions for its claimants etc.,
PRINCIPLES OF CG
Necessity of CG 1. Transparency 2. Accountability 3. Prompt and proper disclosure 4. Compliance to moral and ethical values 5. Compliance to legal framework and voluntarily adopted practices 6. Helps in qualitative decision making 7. Enhanced trust of decision making 8. Combats corruption 9. Helps in getting easy finance from financial institutions.
Objectives
1. Properly structured board to take good decisions in good interest of everybody 2. Proper representation of the Board containing directors 3. Board should be able to arrive at transparent practices and procedures. 4. Effective machinery to serve the shareholders. 5. Inform the stakeholders and update them. 6. Monitoring and control of the management.
Issues that constitute elements of a good CG 1. Board ( roles,
What is Corporate Governance?
It is a set of systems, principles and processes by which a company is governed. It provides guidelines as to how the company can be directed or controlled so that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial to all the stakeholders in the long run.
The term was first used by Robert Ian in his book in the year 1984.
It addresses the issues facing the Board of Directors such as interaction between top management and the relationship with the owners and others interested in the affairs of the company.
Cadbury committee defined Corporate Governance as a) It is fulfilling strategic goals of owners b) Employee Welfare c) Consideration of the environment and the community d) Maintain relations b/w the customers and suppliers e) Compliance with legal and regulatory requirements
As per Desirable Corporate Governance Code, 1998
CG deals with laws, procedures, practices and rules that determines a company’s ability totake good managerial decisions for its claimants etc.,
PRINCIPLES OF CG
Necessity of CG 1. Transparency 2. Accountability 3. Prompt and proper disclosure 4. Compliance to moral and ethical values 5. Compliance to legal framework and voluntarily adopted practices 6. Helps in qualitative decision making 7. Enhanced trust of decision making 8. Combats corruption 9. Helps in getting easy finance from financial institutions.
Objectives
1. Properly structured board to take good decisions in good interest of everybody 2. Proper representation of the Board containing directors 3. Board should be able to arrive at transparent practices and procedures. 4. Effective machinery to serve the shareholders. 5. Inform the stakeholders and update them. 6. Monitoring and control of the management.
Issues that constitute elements of a good CG 1. Board ( roles,