The document discusses various definitions and principles of corporate governance, emphasizing that it involves effectively managing relationships between shareholders, managers, and other stakeholders to ensure a company is run in a transparent, ethical, and sustainable manner that benefits all involved. It also outlines expectations of different stakeholders and factors important for good governance like adherence to law, best practices, and social responsibility.

1. Corporate Governance
Prof. R N Swain,
School of Management,
KIIT University

2. Governance
 To steer an organisation in the
desired direction
 The responsibility to steer lies with
the Board of Directors/Governing
Board

3. Corporate Governance : Def
 Corporate Governance is the
application of best management
practices, compliance of law in true
letter and spirit and adherance to
ethical standards for effective
management and distribution of
wealth and discharge of social
responsibility for sustainable
development of all stakeholders

4. Governance is concerned with:
 The intrinsic nature of an organisation
 Purpose of an organisation
 Integrity of an organisation
 Identity of an organisation
 Relevance of an organisation
 Continuity of an organisation
 Fiduciary aspects of an organisation

5. Kautilya’s Arthasastra:
 For good governance all administrators
including the King are considered
servants of the people
 Their duty:
 Raksha – protection (risk management)
 Vridhi –(stakeholders value enhancement)
 Palana-(compliance to the law in spirit)
 Yogakhema (social security system–CSR)

6. Six enemies of good
governance:
 Lust
 Anger
 Greed
 Conceit
 Arrogance
 Foolhardiness
(Personal ethics of Corporate Leaders)

7.  Good governance results in stability
 There will be stability if leaders are
responsive, accountable and
removable

8. Definitions of Corporate
Governance
 Conduct of business in accordance with
shareholders desires (maximising wealth)
while confirming to the basic rules of the
society embodied in the Law and Local
Customs
 Relationships among various participants
in determining the direction and
performance of a corporation

9. Corporate Governance: Def:
 Effective management of relationships
among
 Shareholders
 Managers
 Board of directors
 employees
 Customers
 Creditors
 Suppliers
 community

10. Corporate Governance: Def:
 Corporate Governance requires the
formation of the value framework,
the ethical framework and the
moral framework which will guide
the decision making process

11. Corporate Governance: Def:
President of World Bank-Wolfensohn
 Corporate governance is about
promoting corporate fairness,
transparency and accountability
 The way a company is organised and
managed to ensure that all financial
stakeholders (shareholders and
creditors) receive their fair share of a
company’s earnings and assets

12. Corporate Governance: Def:OECD
 Corporate governance is a system by
which business corporations are
directed and controlled

13.  Corporate governance structure
specifies the distribution of rights and
responsibilities among different
participants in the company such as
board, management, shareholders
and other stakeholders and spells out
the rules and procedures for
corporate decision making.

14.  Corporate Governance provides the
structure through which company’s
objectives are set along with the
means of attaining these objectives
as well as monitoring performance

15. Corporate Governance-Def: Cadbury
Committee
 It is a system of structuring, operating
and controlling a company with the
following specific aims:-
 Fulfilling long-term strategic goals of owners
 Taking care of the interests of employees
 A consideration for the environment and local
community
 Maintaining excellent relations with customers
and suppliers
 Proper compliance with all the applicable legal
and regulatory requirements

16. Corporate Governance-Def:By CII
 Corporate governance deals with
laws, procedures, practices and
implicit rules that determine a
company’s ability to take informed
managerial decisions vis-à-vis its
claimants-in particular, its
stakeholders, creditors, customers,
the state and employees

17. Kumar Mangalam Birla
Committee:
 Strong corporate governance is
indispensable to resilient and vibrant
capital markets and is an important
instrument of investor protection
 It is the blood that fills the veins of
transparent corporate disclosures and
high quality accounting practices
 It is the muscle that moves a viable and
accessible financial reporting structure

18. Narayan Murthy Committee
 Corporate governance is the
acceptance by management of the
inalienable rights of shareholders as
the true owners of the corporation
and of their own role as trustees on
behalf of the shareholders
 It is about commitment to values,
about ethical business conduct and
about making a distinction between
personal and corporate funds in the
management of a company

19. Principles of Corporate
Governance
 Sustainable development of all stake
holders- to ensure growth of all individuals
associated with or effected by the
enterprise on sustainable basis

20.  Effective management and
distribution of wealth – to ensue that
enterprise creates maximum wealth
and judiciously uses the wealth so
created for providing maximum
benefits to all stake holders and
enhancing its wealth creation
capabilities to maintain sustainability

21.  Discharge of social responsibility- to
ensure that enterprise is acceptable
to the society in which it is
functioning
 Application of best management
practices- to ensure execellance in
functioning of enterprise and
optimum creation of wealth on
sustainable basis

22.  Compliance of law in letter & spirit- to
ensure value enhancement for all
stakeholders guaranteed by the law
for maintaining socio-economic
balance
 Adherence to ethical standards- to
ensure integrity, transparency,
independence and accountability in
dealings with all stakeholders

23. Shareholders expectations vrs.
Other stakeholders expectations
 Shareholders are key stakeholders
and they expect management to use
their hard earned money responsibly
to the productive use and
enhancement of value for their
money.

24.  The stakeholders on whom the
company depends heavily, partner
with the company to make it a
successful venture. Hence they also
have certain expectations:
 Employees expect adequate
remuneration for their services and
security so that they can lead a better
life

25.  Customers expect best quality products at
minimum price so that they can achieve
various ends with their scarce means
 Vendors expect fair and timely return on
goods and services supplied by them.
Lenders expect timely repayment of loan
and interest thereon

26.  Government expects management to be
partner in nation building by paying accurate
taxes or directly incurring expenditure on
national development project
 Society has a larger stake and thus larger
expectations. It owns the resources that move
through value chain. Sustainability of business
mainly depends on sustainability of these
scarce resources.

27. Public perception about
Corporate world
 Corporate leadership is fraught with
greed & excess

28. Business institution
 Created by society to meet the
purpose of the society
 A citizen of the country
 Secondarily a business organisation

29.  interdependency of the World market

30. Modern Corporate Model
 A system of trust & confidence
 Assumptions:
 Shareholders entrust directors to provide
oversight of the executives who
professionally deploy crores rupees
worth of company’s assets for its long
term sustainability & shareholder value

31. System of corporate stewardship
 It becomes effective when
shareholders have a high level of
confidence that their representatives
are managing the affairs of the
company in its best interest

32.  To achieve this level of investor
confidence, the corporate leaders
need -
 a set of tools that provide:
 greater visibility into their organizations &
 strengthen corporate governance &
 corporate performance management

33. Corporate Governance Model
 Keep the house clean, transparent &
accountable
 Report the same in a time bound
manner
 Management to look beyond their
systems & procedures

34. How to go about it
 Model charter for the Audit Committee
 Model Whistle Blower Policy
 Model code of Ethics for principal executives
and senior financial officers
 Model policies & guidelines relating to HR
 Succession planning
 Diversity in employment, environment &
acceptance of gifts
 Model policy on Ombudsman for companies

35. Are these mandatory under law?
 Yes.
 SEBI requires listed companies to
report on Corporate Governance in
their Annual Reports:
 Disclosures on mandatory requirements
 Disclosures on non-mandatory
requirements
 Management Discussion & Analysis
Report

36. Disclosures about mandatory
requirements
 Brief statement on company’s
philosophy on Code of Governance
 Composition of Board of Directors
 Remuneration of directors & Board’s
procedure & code of conduct
 Disclosure of non-executive directors’
pecuniary relationship or transactions

37.  Audit committee, its constitution,
role, & power
 Management as a body
 Investors’ grievance mechanism
 Report on Corporate governance

38. Disclosures about Non mandatory
requirements
 The Board, its procedures & its
Committees
 Mechanism for evaluating non-
executive board members
 Training of board members
 Remuneration committee
 Nomination committee

39.  Investors’ grievance committee
 Means of communication of
company’s results of performances
 Shareholders’ rights
 Audit qualifications
 Whistle blower policy

40. How corporate rise high
-A review
 Bajaj Auto Ltd.
 Vision
 By challenging the given
 By exploring the unknown & thereby stretching
ourselves towards tomorrow, today
 Mission
 Bajaj strives to inspire confidence through
excitement engineering
 Blending together youthful creativity &
competitive technology to exceed the spoken &
the implicit expectations of our customers

41. Godrej consumer products Ltd.
 Vision
 We are dedicated to deliver superior
stake holder value by providing solutions
to existing & emerging consumer needs
in the house hold & personal care
business
 We will achieve this thru enduring trust
& relentless innovations delivered with
passion & entrepreneurial sprit

42. Mission
 We shall operate in existing & new
businesses which capitalize on the Godrej
brand & our corporate image of reliability &
integrity
 Our objective is t delight our customers
both in India & abroad
 We shall achieve this objective thru
continuous improvement in quality, cost &
consumer service
 We shall strive for excellence by nurturing,
developing & empowering our employees &
suppliers

43. Hero Honda Motors Ltd.
 Vision
 World class manufacturer
 Market leader
 Highest level of customer satisfaction
 Excellence thru team work
 Enduring relationship with stake holders

44. Mission
 We at Hero Honda, are continuously striving for
synergy between technology, systems & human
resources to provide products & services that
meet quality, performance & price aspirations of
our customers.
 While doing so, we maintain the highest standards
of ethics & societal responsibilities, constantly
innovate products & processes, & develop teams
that keep the momentum going to take the
company to excellence in the new millennium

45. Infosys Technologies Ltd.
 Vision/Mission
 To be a globally respected corporation
that provides best of breed business
solutions, leveraging technology,
delivered by best in class people

46. Larsen & Toubro Ltd.
 Vision
 L&T shall be a professionally managed Indian
multinational, committed to total customer
satisfaction & enhancing shareholder value
 L&T-ites shall be an innovative, entrepreneurial
& empowered team constantly creating value &
attaining global bench marks
 L&T shall foster a culture of caring, trust &
continuous learning while meeting expectations
of employees, stakeholders & society

47. Siemens Ltd.
 Mission/Vision
 To set the benchmark by being the best
in class’ in our fields & to create value
for our customers, wealth for our
stakeholders & a future for our
employees, while giving back graciously
to society, a piece of our success

48. Assignment
 Read at least 20 articles on corporate
governance.