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A Presentation On

Corporate Governance

Introduction
Meaning &Definition:Corporate governance is a process
or a set of system to ensure that the
company is managed in the best
interest of all.
It is a process whereby, directors
are entrusted with responsibilities &
duties in relation to the direction of
corporate affairs.

Corporate Governance
It is a process & a set of system which
include the structural & organizational
matters.
Stakeholders in Corporate
governance :1) Internal stakeholders
(Promoters, Directors, Members,
workman & executives.)
2) External stakeholders
(Shareholders, Customers, Lenders,
Dealers, Vendors, Bankers, Financial
institutions, communities, government,
& Regulators.)

Corporate Governance
Corporate governance is a voluntary
ethical code of business of companies.
It is concerned with the morals, ethics,
values, parameters, conduct &
behaviour of the company & its mgt.
It deals with laws procedures,
Practices & implicit rules that
determines a Companys stability to
take managerial decisions related to
its elements.
i.e. shareholders, creditors, state &
employees.

Corporate Governance
It refers to an economic, legal &
institutional environment that
allows companies to diversity,
growth, restructure, and exit & do
everything necessary to maximize
long term shareholders value in a
legal & ethical manner, ensuring
fairness, courtesy & dignity in all
transactions within & outside the
company.

Corporate Governance
It is concerned with accountability,
morals, ethics, values,
parameters, conduct & behavior
of the company & its
management towards the
stakeholders .

Tests for effective Corporate


Governance
Whether

the funds of the company have been


deployed for pursuing the main objects of the
company as enshrined in the memorandum ?
Whether the funds raised from financial
institutions & the capital market have been
utilized for the purpose for which they were
intended ?
Whether there is transparent financial reporting
& audit practices & the accounting practices
adopted by the company are according to AS of
ICAI.

Tests for effective Corporate


Governance
Whether

the company has the core


competence to effectively manage
its diversifications ?
Whether there has been diversion of
funds by way of loans & advances
or investment to subsidiary or
investment companies ?
Whether the personal properties of
the directors have been let-out at a
fabulous rent to the company ?

Tests for effective


Corporate
Governance

Whether the provisions of the


companies act,factories act & other
statutes are complied with in letter &
in spirit ?
Whether the internal control in place
are effective ?
whether the practices adopted by the
company & its management towards
its shareholders, customers, suppliers,
employees are ethical & fair ?

Indian Reports on corporate


governance
CII

code of desirable corporate


governance (1998)
UTI code of governance (1999)
Kumar Mangalam Birla committee
sponsored by SEBI(2000)
RBI advisory group on banking sector
(2001)
Naresh Chandra committee on Audit
& governance (2002)
Narayana murthy committee on
corporate governance (2003)

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