Responsibilities of CEO, Investors, Shareholders.

2. Introduction
Corporate governance is "the system by which
companies are directed and controlled". It involves
regulatory and market mechanisms, and the roles
and relationships between a company’s
management, its board, its shareholders and
other stakeholders, and the goals for which the
corporation is governed. In contemporary business
corporations, the main external stakeholder
groups are shareholders, debtholders,
trade creditors, suppliers, customers and
communities affected by the corporation's
activities. Internal stakeholders are the board of
directors, executives, and other employees.

3. Scope of Corporate
Governance:
 To enhance the long term value and economic
efficiency of the company. It encompasses all
shareholders and integrates all the
participants involved in the process.
 To elevate the reputation of the corporation
and the esteem of the esteem of its
management.
 To attract, employ and retain talent and
motivate employees to give their best. A more
open and participative style of management
ensures free exchange of ideas and frank
appreciation at all levels.

4. Scope of Corporate Governance
 To create and adopt, code of conduct with
wholehearted commitment and improve the moral
and ethical standards of performance to the utmost
level.
 To have a right balance, knowledge, and competence
to set strategies and lead the organization.
 To use the resources entrusted to the management,
in the most economic, productive and effective
ways, for the benefit of shareholders as well as for
the society at large.
 To set the high standards of business ethics based
upon humanity, honesty and handwork.

5. Scope of Corporate
Governance:
 To improve the standard of living and life of the
society, industry, commerce and professional
services.
 To generate accurate and reliable information.
 To make the decision-making process
transparent.
 To prepare a small enterprise for growth and
help secure new business opportunities when
they arise.
 To improve the economic efficiency of the firm.
 To increase the market confidence of the firm.

6. Agency
Theory

7. Meani
of organizational
behavior) wherein the
owners of funds (alias
ng
principals) invest their
money in a company that is
managed by on altogether
different group of people
called directors is based
on the premise of trust;
shareholders lend their
money to directors under
trust that the latter shall

8. Definition
‘Hypothesis that attempts to explain
elements of organizational behavior through
an understanding of the relationships
between principals (shareholders) and
agents (directors and managers). A conflict
may exist between the actions undertaken by
agents in furtherance of their own self-
interest and those required to promote the
interest of principals.’

9. Some Of The Instances
Wherein A Conflict Can Exist
Between Owners And
Managers are interested in short term
profits against long term shareholders value,
as Managerspositive As Follows
it has a Are impact on their
compensation, incentives, bonus and promotion.
The episode of the sub-prime crises in United
States demonstrates this conflict wherein the
investment bankers and financial institutions
took resource to highly complex derivative
products in order to inflate short-term
profits and thereby increase their incentives.
Quite often, managers having financial interest
in their own company tend to send wrong cues

10. Assumptions
would alwaysBy Smith
Given be too high.
The costs of agency relationships
Those costs shall rise with the
increase in size of business.
Bigger a business gets, the grater
would be the waste because of
negligence.
Negligence, profusion and conflict
of interest would be predicament

11. As these assumptions have been read
onto corporate governance, and
informed its reform in recent
decades, they have resulted in what
are now an almost universal set of
techniques and practices designed to
control the conduct of executives
both within the corporation and
externally. Inside the company,
boards have essentially two means
to exercise control over executives;
they can fire them and they can give

12. Differen Corporate Corporate
ce Governance Management
Between
Corpora External Focus Internal Focus
te Governance Management
assumes an open assumes a
Governa system closed system
nce And Strategy-
Task-oriented
Corpora oriented
Concerned with Concerned with
te
where the getting the
Manage company is going company there

13. Role of CEO
The primary role of a CEO is to run the
organisation in an efficient manner to
produce the desired results. Apart
from running the business effectively,
the CEO is expected to have a
constructive working relationship with
the chairman and the directors

14. Areas to play role for CEO-
Power and influence through
personal action.
Handling the organizational politics.
Role as negotiator.
Role as communicator.
Role of being a role-model.

15. Personal Action:
Ordering the employees
Making subtle cultural change
Persuading the employees
Inducing the employees

16. Politics in firms
If there are some conflicting
demands, he needs to find which
demand is genuine and urgent, had
fulfill it accordingly. Thus, he
needs to take every measure to
ensure that politics remain to the
minimal in the firms.

17. CEO as negotiator:
 Do not negotiate on position. Justice
demands that both sides should be given a
patient hearing.
 Use negotiation for making the person
agrees to increase productivity, reduce
absenteeism of workers.
 The CEO should negotiate on the problem
and not involve personalities of the people
who are party to the negotiation.

18. CEO as Communicator:
The CEO wields his personal power
through communication with the
employees.
The role of CEO as communicator
exceeds the informative range; it
goes on to listening to employee’s
complaints, their problems, when it
becomes a two-way communication.

19. CEO as Role-Model:
Catalyst for transformation,
Reaching out to entire firm’s
administration,
Planner of strategies, and
Problem solver.

20. ROLE OF BOARD AND
SENIOR EXECUTIVES
A group of top executives and very
senior managers in a company
constitutes its board of directors.
The board is a bridge which links the
persons who are shareholders with
those who manage or create value and
for the company.

21. Duties of Board of Directors
 Duty of Care – Duty of care implies
that the director is obliged to
exercise adequate diligence indecision
making.
 Duty of Loyalty: Duty of loyalty
means a director must have
uncompromising loyalty to the
organisation which he must
demonstrate through his actions.

22. Functions of the Boards
 Reviewing, approving and overseeing
fundamental financial and corporate
strategies and major corporate actions.
 Reviewing and approving long-term strategic
and business plans, overseeing execution and
evaluating results of such plans.
 Nominating directors, reviewing the
structure and operation of the Board and
overseeing effective corporate governance.
 Assessing major risks facing the company
and reviewing options for their mitigation.

23. Functions of the Boards
 Ensuring that processes are in place for
maintaining the integrity of the company,
including the integrity and transparency of
its financial statements, compliance with laws
and ethics, the integrity of relationships with
customers and suppliers and relationships
with other stakeholders.
 Selecting the company’s CEO, Chairman of
the Board and Lead Independent Director.

24. Relationship between the
Board and Senior Executives
 The relationship between senior
executives and the Board is a partnership
that is crucial to any company’s long term
success.
 Those who have the opportunity to
materially influence the integrity,
strategy and operation of the company
and its financial performance are
considered to be a Senior Executive.

25. Responsibilities of the
Chairman
Chairman:
• Lead the board.
• Ensure the efficient organisation and
conduct of the Board’s function.
• Brief all Directors in relation to issue
arising at Board meetings.
• Chair shareholder meetings of the
Company.
• Exercise such specific and express
powers as are delegated to the
Chairman by the Board from time to
time.

26. Responsibilities of the
Managing Director
Managing Director:
• Manage and administer the day-to-
day operations of the company.
• Supervise senior executives and
represent them to the Board.
• Exercise such specific and express
powers as are delegated to the
Managing Director by the Board
from time to time.