 | | | 40 pages | | | 26-04-2010 | | |  |
| | Not evaluated | | |
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In the past the Indian Economy was a controlled one. It has consciously shifted to a market driven one. Moreover, several developments all round have taken place. With the liberalisation and globalisation of the Indian economy, Indian Corporations need to assimilate these developments so as to survive and flourish amidst global competition. Globalisation has opened up vast opportunities for domestic players but is also fraught with various challenges. Indian Corporations can aspire to reach their goals successfully by applying the principles of good governance. Good governance is the means by which corporations can achieve their objectives - create wealth for the company, maintain and preserve that wealth efficiently and share that wealth with stakeholders. Moreover, foreign institutional investors are now demanding greater professionalism in corporate activities. The practice of good corporate governance has become the necessary pre-requisite for any corporation to manage their business effectively within an increasingly globalised market. Thus good Corporate Governance today is a national priority in order to boost the country, attract foreign direct investment, regain the lost trust of investors and society, and more so to do business globally.
Corporate Governance refers to the distribution of rights and responsibilities among different participants in the organisation/company such as, the Board of Directors, management, the shareholders and other stakeholders (i.e. Lendorscreditors) and spells out rules and procedures for making decisions on corporate affairs. The focus is on business practices and quality of disclosure standards with respect to its equitable treatment of, and fairness to the interest of the corporates’ financial stakeholders. The core principles of corporate governance practices are fairness, transparency, accountability and responsibility. The codes and standards which are applicable for Indian listed companies have been defined by Naresh Chandra and Narayan Murthy Committees.
Although no universally accepted model of good corporate governance exists and its principles are widely accepted, yet these principles are not a “one size fits all”, yet must be adjusted to reflect the specific circumstances and needs of individual organisations. The definition of Corporate Governance stresses the need for the board of directors to balance the interests of shareholders with those of other stakeholders in order to achieve long-term sustained value.
Corporate Governance has assumed vital importance in the wake of increasing competition and globalisation. Its most important role is in determining the direction and performance of Companies keeping in view the objectives of Corporate Governance. It is vital to the Nation’s economic health that Corporations are managed well. Adoption of good Corporate Governance practices has emerged as an integral element for doing business. It is not only a pre-requisite for facing intense competition for sustainable growth in the emerging global market scenario but is also an embodiment of the parameters of fairness, accountability, disclosures and transparency to maximise value for the stakeholders[...]
I. INTRODUCTION
- Meaning and Philosophy
- Importance of Corporate Governance
- Corporate Governance - A Perspective
- Corporate Governance in India
- Principles of Corporate Governance
- Objectives of Corporate Governance
- Good Corporate Governance
- Corporate Governance as per Professional Bodies:
i) The Securities & Exchange Board of India (SEBI)
ii) The Stock Exchanges
iii) The Institute of Chartered Accountants of India
iv) Other professional bodies
v) The Institute of Company Secretaries of India
- Standards
- Compliance
(A) Composition of Board
(B) Non executive directors’ compensation and disclosures
(C) Other provisions as to Board and Committees
(D) Code of Conduct
II Audit Committee
(A) Qualified and Independent Audit Committee
(B) Meeting of Audit Committee
(C) Powers of Audit Committee
(D) Role of Audit Committee
(E) Review of information by Audit Committee
III. Subsidiaries
IV. Disclosures
(A) Basis of related party transactions
(B) Disclosure of Accounting Treatment
(C) Board Disclosures – Risk management
(D) Proceeds from public issues, rights issues, preferential issues etc.
(E) Remuneration of Directors
(F) Management
(G) Shareholders
V. CEO/CFO certification
VI. Report on Corporate Governance
VII. Compliance
Annexe I.A
Information to be placed before Board of Directors
Annexe I.B
Format of Quarterly Compliance Report on Corporate Governance
Annexe I.C
Suggested List of Items to Be Included In the Report on Corporate Governance in the Annual Report of Companies
1. A brief statement on company’s philosophy concerning code of governance
2. Board of Directors
3. Audit Committee
4. Remuneration Committee
5. Shareholders Committee
6. General Body meetings:
7. Disclosures:
8. Means of communication.
9. General Shareholder information:
Annexe I.D Non-Mandatory Requirements
(1) The Board
(2) Remuneration Committee
(3) Shareholder Rights
(4) Audit qualifications
(5) Training of Board Members
(6) Mechanism for evaluating non-executive Board Members
(7) Whistle Blower Policy
Corporate Governance Rating
