1. What is corporate governance? Corporate governance refers to the set of systems, principles and processes by which a company is governed.

They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. 2. What are the principles underlying corporate governance? Corporate being transparent with regard to all transactions, making all the necessary disclosures governance is based on principles such as conducting the business with all integrity and fairness, and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. Another point which is highlighted in the SEBI report on corporate governance is the need for those in control to be able to distinguish between what are personal and corporate funds while managing a company. 3. Why is it important? Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market. Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. Unfortunately, corporate governance often becomes the centre of discussion only after the exposure of a large scam. 4. Why was it in the news recently? Corporate governance has most recently been debated after the corporate fraud by Satyam founder and chairman Ramalinga Raju. In fact, trouble started brewing at Satyam around December 16 when Satyam announced its decision to buy stakes in Maytas Properties and Infrastructure for $1.3 billion. The deal was soon called off owing to major discontentment on

the part of shareholders and plummeting share-price. However, in what has been seen as one of the largest corporate frauds in India, Raju confessed that the profits in the Satyam books had been inflated and that the cash reserve with the company was minimal. Ironically, Satyam had received the Golden Peacock Global Award for Excellence in Corporate Governance in September 2008 but was stripped of it soon after Raju's confession. The real problem at eBay:

1. Write short note on SEBI & its Clause 49. Explain the new corporate governance norms given by
the SEBI for the improvement in the following article. What are the basis of improvemwent.

SEBI to issue details of corporate governance norms

(A circular with regard to) NEW DELHI: Market regulator Sebi will soon come out with a detailed framework for the implementation of new corporate governance norms that pertain to protecting whistle-blowers, having orderly succession plans and keeping at least one woman director on company boards. A circular with regard to detailed corporate governance norms for listed companies is in the process of being issued, official sources said. The board of Securities and Exchange Board of India last month approved a proposal to amend the Listing Agreement with respect to these norms for listed companies. The clearance follows months-long discussion among various stakeholders on draft regulations released last year. The SEBI board was informed about the status of new norms at its meeting yesterday. They will take effect for all listed companies from October 1, 2014. Every listed company will need to have at least one woman director on the board. Also, boards will have to adopt a policy on succession planning. The companies would also need to adopt a whistle-blower policy for employees. That apart, the norms seek to check all related party transactions with entities linked to promoters and directors. Besides, the number of directorship a person can hold on company boards would be capped, along with various other measures to safeguard the interest of minority shareholders.

The norms also provide for greater oversight by minority shareholders and independent directors for checking any unjustifiable payments to related parties. The new regulations seek to align the existing SEBI regulations with the new Companies Act and will soon be incorporated into the listing agreement for implementation. Meanwhile, CNBC TV 18 quoted Sebi Chairman U K Sinha as saying that the area of corporate governance remains an issue in India and more work needs to be done to improve standards. "Shareholders are increasingly becoming more active and corporate authority is being challenged," he said in a conference organised by the International Bar Association. He said public authorities; including regulators were facing 'comprehensive evaluation'. "SEBI is trying to follow the primary legal mandate of investor protection. Our enforcement actions are due to close scrutiny and feedback from stakeholders," Sinha said, adding that more work was required in the field of surveillance 2. The issue of corporate governance in the private sector is a reality and it's time they live up to that," says Sachin Pilot, minister of corporate affairs. The 62-year old law that governs companies is on the cusp of being replaced by new rules, which the government says will usher in many good practices. The big picture shows intent, but it's the small details, which will unravel in the coming year, that will show the government's seriousness to follow through. Also, adds Jamil Khatri of KPMG: "The challenge is not to introduce new provisions, but implementation." As we wait for greater clarity, John Samuel Raja D breaks down the new legislation to show how things will change for companiesand, by extension, their stakeholders like investors, creditors, auditors and employees. Disclose More Information Information is a currency, and the new bill looks to put more of it in the public domain, particularly related to unlisted and privately-held companies. This set has reporting requirements that are much more lenient than their listed peers, which make up about 1% of the 1.06 million companies registered with the MCA. Lately, several transactions of private companies that, directly or indirectly, intersected with public interestcoal block allotments, business interests of BJP president Nitin Gadkari, real estate dealings of Congress Party president's son-in-law Robert Vadra with DLFhave made a case for this set of companies to put out more information. The proposed law wants companies to give financial statements that consolidate the numbers of all their subsidiaries, including associates (at least 20% stake) and joint ventures. It also wants them to put out their cash-flow statement, which is the place to find how much of a company's cash came from operations and how much from external financing. Such disclosures will give a more holistic picture of an entity's business interests. Thanks to capital market regulator Securities Exchange Board of India,

listed companies already present consolidated accounts, up to an extent, and cash-flow statement. Even they would have to make adjustments. "Companies that previously reported consolidated annual numbers as per IFRS (International Financial Reporting Standards), which was permitted by Sebi, would now need to consider the need to again report consolidated numbers as per Indian accounting principles," says Jamil Khatri, global head of KPMG's accounting advisory services, who wants companies to do so on a quarterly basis. Other changes proposed include seeking shareholder approval when a related party (a director of the company, or its holding company or subsidiary) acquires assets from the company for a non-cash consideration. How new rules will change Corporate Governance Practices in Indian companies?

3. CSR spending to be made mandatory for companies

With an aim to improve corporate governance, the government today approved various amendments to Companies Act, including mandatory earmarking of funds by companies for Corporate Social Responsibility (CSR) spending. As per the amendments approved by the Union Cabinet this evening, the companies would also have to give preference to the local areas of their operation for such spending. The companies would have to either implement mandatory CSR spending or "cite reasons for nonimplementation" or any short-fall, as per the proposed amendments. Previously, the Bill had called for the companies to "make every endeavour to" spend two per cent of their 3-year average profit towards CSR activities -- thus leaving the matter voluntary for the companies. Among other major proposals, which would now go to the Parliament for approval, a new provision has been made for punishing those falsely inducing a person to enter into any agreement with banks or financial institutions with a view to obtain credit facilities. The revised Companies Bill, 2011, which is expected to be introduced in the winter session of Parliament, has also limited the number of companies for one auditor to 20, while brining in more clarity on criminal liability of the auditors. An official release about the Cabinet decision said the amendments help serve "better the interests of the corporates, investors and other stakeholders". "The proposed legislation will bring the law on the subject of corporate functioning and regulation in tune with the global best practices so that there is further improvement in corporate governance in the country through enhanced accountability and transparency," the release said. Explain the relation between CSR & Corporate Governance