Code of Corporate Governance 2012

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Code of Corporate
Code of Corporate
Governance 2012
Iftikhar Taj Mian, FCA
PICG Certified Director
Member Boards of Nagina Group
Boards of Nagina

ITM @ thanks.pk

Today’s Topic
Code of Corporate Governance 2012- CCG
1. Understanding basics of Corporate Governance
2. Understanding Code of Corporate Governance 2012
3. Criteria for institutions to offer DTP
4. Comparison of Old and New Code
5. What lacks in CCG
6. Key Concerns
7. Answers to important questions with regard to CCG
6th Oct 2012

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2

What is Corporate Governance (CG)?
The Organization for Economic Co-operation and
Development (OECD)
“Corporate governance deals with the rights and
governance deals with the rights and
responsibilities of a company’s management, its board,
shareholders and various stakeholders.”

6th Oct 2012

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3

What is Corporate Governance (CG)?
IFC
"Corporate governance is the system by which companies
are directed and controlled... Boards of directors are
responsible for the governance of their companies. The
shareholders' role in governance is to appoint the directors and the auditors and to satisfy themselves that an
appropriate governance structure is in place.

6th Oct 2012

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4

What is Governance
Govern
1.To rule by right of authority
2. To

direct,

guide,

control,

influence……..

Governance
The exercise of direction, authority and control

6th Oct 2012

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5

What is Management
Manage
1. To conduct (the day-to-day) business
2. To bring about or succeed in accomplishing a task
3. To administer
management)

and

supervise

(the

functions

of

Management
1. The organizing and controlling of the affairs of a
business or a particular sector of a business
2. The act of conducting business; bringing about or
succeeding in accomplishing a task.
6th Oct 2012

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6

What CG does ?
Corporate governance provides the structure for
shareholders to define, implement and monitor a company's
goals and objectives,
while the management is responsible for delivering on
those goals and objectives.
To put it in very simple terms, the board of directors makes policy, and management carries it out.

6th Oct 2012

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7

Role of Board and Management?
Board responsibilities, according to OECD include:
•Develop the company's purpose, vision, values
the company purpose vision values
•Guide strategy
•Oversee management
•Nominate key executives
•Align remuneration of board and key executives with longterm interests of the company •Ensure that properly supervised controls are in place
•Oversee disclosure and communications

6th Oct 2012

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8

Role of Board and Management?
The senior management team, by contrast, holds specific
executive powers of managing the day-to-day business of
the company and is accountable to the board for the proper
fulfillment of its designated functions, tasks and strategic and
operational
objectives.
The highest levels of senior management (typically, the
chief executive officer) may also sit on the board of
directors, in which case, they are referred to as "executive directors."

6th Oct 2012

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9

Key Benefits of good CG
• Shareholders enhanced confidence
• Transparency
• Greater and cheaper source of Capital Borrowings
• Greater financial sector stability
• Faster corporate sector growth and job creation
• Better protection for all investors, including pension
beneficiaries
• Active Capital Markets beneficial to minority
shareholders
• Good corporate governance practices lead to better
companies and, in turn, better societies.
6th Oct 2012

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10

Key Parameters of CG


Good Board Practices.



Shareholder Rights.



Control Environment.



Disclosure & Transparency.



Commitment.

6th Oct 2012

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