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    Code of Corporate Governance

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    JagrityTalwar
    Corporate governance refers to the structures and processes used to direct and manage companies in the interests of stakeholders. Effective corporate governance involves relationships among shareholders, managers, directors, and other stakeholders. It also requires principles of accountability, transparency, fairness, integrity, and responsibility. Key aspects of corporate governance include the board of directors, relationship between executive and non-executive directors, independence of directors, nomination and remuneration processes, duties and responsibilities of directors, disclosure, and prevention of misconduct. Effective corporate governance enhances company and economic performance.

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    Code of Corporate Governance

    Uploaded by

    JagrityTalwar
    127 views30 pages
    Corporate governance refers to the structures and processes used to direct and manage companies in the interests of stakeholders. Effective corporate governance involves relationships among shareholders, managers, directors, and other stakeholders. It also requires principles of accountability, transparency, fairness, integrity, and responsibility. Key aspects of corporate governance include the board of directors, relationship between executive and non-executive directors, independence of directors, nomination and remuneration processes, duties and responsibilities of directors, disclosure, and prevention of misconduct. Effective corporate governance enhances company and economic performance.

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    Corporate governance refers to the structures and processes used to direct and manage companies in the interests of stakeholders. Effective corporate governance involves relationships among shareholders, managers, directors, and other stakeholders. It also requires principles of accountability, transparency, fairness, integrity, and responsibility. Key aspects of corporate governance include the board of directors, relationship between executive and non-executive directors, independence of directors, nomination and remuneration processes, duties and responsibilities of directors, disclosure, and prevention of misconduct. Effective corporate governance enhances company and economic performance.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    127 views30 pages

    Code of Corporate Governance

    Uploaded by

    JagrityTalwar
    Corporate governance refers to the structures and processes used to direct and manage companies in the interests of stakeholders. Effective corporate governance involves relationships among shareholders, managers, directors, and other stakeholders. It also requires principles of accountability, transparency, fairness, integrity, and responsibility. Key aspects of corporate governance include the board of directors, relationship between executive and non-executive directors, independence of directors, nomination and remuneration processes, duties and responsibilities of directors, disclosure, and prevention of misconduct. Effective corporate governance enhances company and economic performance.

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    Download as ppt, pdf, or txt
    of 30

    Corporate Governance

    &
    Code of Corporate
    Governance

    Corporate Governance refers to the structures & processes


    for the efficient & proper direction & control of companies
    (both private and public) in the interest of all stakeholders.
    stakeholders

    Relationships among various participants in


    determining the direction and performance of a
    corporation.
    Effective management of relationships among
    Shareholders
    Managers
    Board of directors
    employees
    Customers
    Creditors
    Suppliers
    community

    CORPORATE
    GOVERNANCE

    - Is a concept; one size does not fit all, HOWEVER:


    - Basic Principles of Corporate Governance:
    Accountability

    Rights of Shareholders

    Transparency

    Interests of

    Stakeholders
    Fairness

    Good Faith

    Integrity

    Trust

    Responsibility

    Controls

    Commitment

    CORPORATE
    GOVERNANCE

    Governance Principles

    Legal / Regulatory

    Codes of Best Practice

    Stakeholder Relations

    Self Regulation

    Ethical Standards

    Risk Management

    CORPORATE
    GOVERNANCE

    Enhances performance of companies


    Enhances access to capital
    Enhances long term prosperity.
    Provides a barrier to corrupt dealings- limiting discretionary decision

    making, increasing oversight, introducing Codes of Ethics etc


    Impacts on the society as a whole:

    Better companies, Better societies.

    Accountability:

    Fairness
    Transparency
    Independence

    At a minimum, Governance involves


    organisational structures
    rules of conduct
    that acts as a check on insiders misusing their position or
    knowledge against the interest of other stakeholders
    The idea is to have GOAL POSTS

    R = Responsibility
    A = Accountability
    F = Fairness
    T = Transparency

    RAFT contributes to
    effectiveness!

    Board Issues
    Composition executive, non-executives, independents
    numbers of each
    Independent directors Importance & Sufficient
    numbers
    Leadership
    Chief Executive Officer separate from chairman
    Qualifications
    Role
    Sub-committees of the board:
    Nominating Committee
    Remuneration
    Audit
    Training
    Attendance at meetings
    Evaluation of board performance
    Tenure

    Who To Appoint? And How?

    CG Code provides:

    Should be a formal and transparent process for the appointment


    of new directors to the Board

    Recommends that key information and the names of the


    directors submitted for election or re-election be disclosed to
    enable shareholders to make informed decisions

    Disclose the process for the selection and appointment of new


    directors to the Board as this ensures greater transparency in the
    nomination process

    Executive and Non-Executive


    Directors
    Executive directors
    company.
    Paid salary

    are

    the

    employees

    of

    the

    Non-Executive
    directors
    (NEDs)
    are
    not
    the
    employees of the company and they do not hold any
    other office of profit in the company or in a related
    company.
    Paid directors fees

    Who Is An Independent Director?


    Have not held, or whose immediate family members
    have not held, during the last one (1) year, a key position
    in the company, such as CEO, general manager, or any
    immediate employment position;
    Have not, and their immediate family members have not,
    during the last one (1) year had any substantial financial
    dealings, including the receipt of remuneration,
    commissions, professional fees, payment for goods and
    services, etc with the company;
    Definition of Family Member - spouse and children
    Role
    Constructively challenge and help develop proposals on
    strategy; and
    Review the performance of Management in meeting
    agreed goals and objectives and monitor the reporting of

    Independence = State of

    Who Is A Nominee Director


    Person appointed to board of directors by an
    appointer:
    Substantial shareholder
    JV Partner
    Investor
    Creditor
    Right to appoint contained in:
    Articles of association

    CEO

    Size of Board = large


    enough to include
    directors with diverse
    expertise and
    experience to suit the
    specific requirements
    of a company and its
    business.
    Guide = board sizes
    range from 7 to 10
    directors, depending
    on the size of the
    company.

    Chairman
    Executiv
    e
    Director
    s

    Independe
    nt
    Directors
    NonExecutive
    Directors

    Recruiting the right


    team

    Main duties of the Board

    The Board must always act in the best interests of the company and
    shareholders as a whole.
    Provide leadership, set strategic aims, direction to the Management, and
    ensure that the necessary financial and human resources are in place for
    the company to meet its objectives;
    Establish a framework of prudent and effective internal controls which
    enables risk to be assessed and managed, and monitor and assess the
    effectiveness of the internal controls established;
    Review Management performance and determine its remuneration; and
    Set the companys values and standards, and ensure that obligations to
    shareholders and others are understood and met.

    Chairmans Role

    Lead the Board to ensure its effectiveness on all aspects of its role and
    set its agenda;
    Ensure that the directors receive accurate, timely and clear
    information;
    Encourage constructive relations between the Board and Management;
    Facilitate the effective contribution of non-executive directors
    Encourage constructive relations between executive directors and nonexecutive directors;
    No to unilaterally issue policies without consulting with the Board as a
    whole with full frank and discussions being completed
    Ensure effective communication with shareholders;
    Promote high standards of corporate governance.

    Remunerate Fairly And Responsibly

    Ensure that level and composition of remuneration is


    sufficient and reasonable
    Ensure that its relationship to corporate and individual
    performance is defined
    Means companies need to adopt remuneration policies that
    attract and maintain talented and motivated directors and
    employees so as to encourage enhanced performance of the
    company
    Important that there be clear relationship between
    performance and remuneration
    Important that policy underlying executive remuneration be
    understood by investors.

    Performance Appraisal

    Identification of performance indicators

    Evaluation against performance indicators

    Evaluation should be conducted at least


    once a year

    Disclosure Of
    Remuneration

    To disclose in Annual Report collectively:


    the remuneration of directors during the year as:

    Director fees
    Other benefits, including share options, long
    term incentive schemes, pension benefits and
    preferential entitlements

    To disclose voluntarily each directors and top management


    remuneration

    Key Duties And Liabilities

    The primary duties of directors include the following:


    good faith;
    acting without conflict of interest;
    not competing with the company
    care and skill;
    disclosure;
    filing returns;
    keeping proper records and preparing financial reports;
    and
    obligations under the Listing Manual.

    Same Duty For All Directors?

    Accountability

    Roles

    Duties &
    Responsibilities

    Definition The management must comprise the CEO,


    executive directors & key managers of the company
    involved in day to day activities.
    Role
    Relationship with board
    Access to information

    Necessary? YES
    Qualifications
    Understanding of compliance
    Imply accountants, lawyers etc can play impt role
    Scope of functions
    Board
    Management
    Committees

    Financial statements to comply with Accounting Standards


    Non-financial statements:
    Conflict of interest
    Compliance with CG measures implemented
    Director remuneration
    Companies operating procedure
    Risk management concerns
    Format for disclosure

    Absolutely essential

    Train the trainers

    For board & management


    Legal (including duties and liabilities) and accounting
    concerns
    Roles and specific functions to gain better understanding
    Business and strategic issues
    Economic issues and changing conditions, and impact on
    companys businesses
    For employees:
    Details of policies of company
    Specific roles and duties and responsibilities, including
    liabilities

    Criteria for CG Award


    Work undertaken to adopt governance principles
    Contribution to significant development
    corporate governance practices

    of

    Promotion of initiatives for the enhancement of


    future corporate governance practices

    Main scope:
    Fraudulent financial reporting
    Misstatements arising from misappropriation of

    assets

    Improper or unauthorized expenditures (including

    bribery and other improper payment schemes)

    Self-dealings (including kickbacks)


    Violations of laws and regulations (including those

    that expose the company or its agents to regulatory


    or criminal actions, e.g. securities frauds, signing
    false audit confirmations)

    Change of culture
    Legal reform
    More training & awareness
    Shareholder activism
    Independent Directors

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