Business Ethics Project on: History of Corporate governance.

Group Members Name Rajesh Jalora Bheru Kharvad Vinay Dhunsikar Priyanka Gaikwad Rohit Grover Tejas Khebde Roll.No 13 14 15 16 17 18

What is corporate governance? Corporate Governance is the application of best management practices, Compliance of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders. -The Institute of Company Secretaries of India Why it is important? Motivates employees. Smooth functioning of organization. Encourages FIIs(foreign institutional investors). Makes easier for the company to get capital from investors. Good image in the market. Positive impact on share price.

Brief history of Corporate Governance Unlike South-East and East Asia, the corporate governance initiative in India was not triggered by any serious nationwide financial, banking and economic collapse. The initiative in India was initially driven by an industry association, the Confederation of Indian Industry.

In December 1995, CII set up a task force to design a voluntary code of corporate governance. The final draft of this code was widely circulated in 1997.

 In April 1998, the code was released. It was called Desirable Corporate Governance: A Code. Between 1998 and 2000, over 25 leading companies voluntarily followed the code: Bajaj Auto, Hindalco, Infosys, Dr. Reddys Laboratories, Nicholas Piramal, Bharat Forge, BSES, HDFC, ICICI and many others Brief history of corporate governance in India Following CIIs initiative, the Securities and Exchange Board of India (SEBI) set up a committee under Kumar Mangalam Birla to design a mandatory-cum-recommendatory code for listed companies. The Birla Committee Report was approved by SEBI in December 2000 Became mandatory for listed companies through the listing agreement, and implemented according to a rollout plan: 2000-01: All Group A companies of the BSE or those in the S&P CNX Nifty index 80% of market cap. 2001-02: All companies with paid-up capital of Rs.100 million or more or net worth of Rs.250 million or more. 2002-03: All companies with paid-up capital of Rs.30 million or more Brief history of corporate governance in India

Following CII and SEBI, the Department of Company Affairs (DCA) modified the Companies Act, 1956 to incorporate specific corporate governance provisions regarding independent directors and audit committees. In 2001-02, certain accounting standards were modified to further improve financial disclosures. These were: Disclosure of related party transactions.

 Disclosure of segment income: revenues, profits and capital employed. Deferred tax liabilities or assets. Consolidation of accounts. Initiatives are being taken to (i) account for ESOPs, (ii) further increase disclosures, and ( iii) put in place systems that can further strengthen auditors independence.

Factors driving corporate governance in India 1) Unethical Business Practices Eg- Security Scams ---Harshad Mehtha Security Scam, 2g Scam 2) Impact of Globalization Integration with Foreign Market Foreign Investors expectations New Business Opportunities --- IT & ITES, BPO etc., New Capital formation FII, FDI 3) Impact of Privatization New structure of ownership Multinational Companies

Principles of Corporate Governance Conducting the business with all integrity and fairness. Being transparent with regard to all transactions. Complying with all the laws of the land. Accountability and responsibility towards the stakeholders and commitment to conduct business in an ethical manner 8. People are more imp0rant than processes. Shareholder accountability. External audit must be independent and penetrating. Disclosure and transparency are crucial to market integrity. There must be an appropriate regularity regime to back these obligations.

Importance of Corporate Governance Changing Ownership Structure. Social Responsibility. Globalization. Ethical Conduct in Business. Improving Economic Efficiency of a Corporate. Co-operation of all stakeholders for the Growth. SCAMS

Objectives To promote a healthy environment for long-term investment.

To create a trust in the corporate and in its abilities. To promote business development. To improve the efficiency of the capital markets. To enhance the effectiveness in the service of the real economy.

Some companies known for their corporate governance Infosys Voted as the Best Managed Compan in Asia. First to follow the US Generally Accepted Accounting Principles before going for Nasdaq listing in 1991. Championed Corporate Governance in India. TATA Won Golden Peacock Award for Excellence in corporate Governance. Won Golden Peacock Award for excellence in Corporate Social responsibility. Some companies known for their corporate governance

Concluding Observations : Concluding Observations Code of CG should be redesigned to reflect international best practices Stringent enforcement of Law More effective coordination and cooperation between SEBI, DCA CG mechanism should be flexible and suitable Overall ethical values in all segments should be promoted for effective accounting, auditing, disclosure and transparent system.