corporate governancee

8/13/2019 Corporate Governancee

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Corporate governance

Corporate Governance is the application of best Management practices, Compliance oflaw in true letter and spirit and adherence to ethical standards for Effective Management

and distribution of wealth and discharge of social Responsibility for sustainable

development of all stakeholders. Corporate governance is concerned with set ofprinciples, ethics, values, morals, rules regulations, procedures etc. Corporate

governance establishes a system whereby directors are entrusted with duties and

responsibilities in relation to the direction of the company!s affairs. "he term#governance means control i.e. controlling a company, an organi$ation etc or a company

corporate governance is governing or controlling the corporate bodies i.e. ethics,

values, principles, morals. %or corporate governance to be good the manager needs to

meet its responsibilities towards its owners &shareholders', creditors, employees,customers, government and the society at large. Corporate governance helps in

establishing a system where a director is showered with duties and responsibilities of the

affairs of the company.

"he concept of (corporate governance! is not an end) it!s *ust a beginning towards growth

of company for long term prosperity.

+-"R/ 0EE1 % CR2R3"E G4ER030CE

Corporate governance concept emerged in ndia after the second half of 5667 due to

economic liberali$ation and deregulation of industry and business. 8ith the changing

times, there was also need for greater accountability of companies to their shareholders

and customers. "he report of Cadbury Committee on the financial aspects of corporateGovernance in the 9.:. has given rise to the debate of Corporate Governance in ndia.

0eed for corporate governance arises due to separation of management from theownership. %or a firm success, it needs to concentrate on both economical and socialaspect. t needs to be fair with producers, shareholders, customers etc. t has various

responsibilities towards employees, customers, communities and at last towards

governance and it needs to serve its responsibilities at the best at all aspects.

R;E % ;3 8 0 CR2R3"E G4ER030CE

;aw can only provide a minimum code of conduct for proper regulation of human beingor company.;aw is made not to stop any act but to ensure that if you do that act, you will

face such conse


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restrictions on 1irectors so that there is no misrepresentation of documents, there is no

e=cessive of power, so that it imposes duty not to make secret profit and make good

losses due to breach of duty, negligence, etc, duty to act in the best interest of thecompany etc

"he issues in corporate governance

5. 4alue based corporate culture> %or any organi$ation to run in effective way, it needs to

have certain ethics, values. ;ong run business needs to have based corporate culture.4alue based corporate culture is good practice for corporate governance. t is a set of

beliefs, ethics, principles which are inviolable. t can be a motto i.e. 3 short phrase

which is uni "his holistic view is more or less godly, religious attitude which helps

in running organi$ation. t is not easier to adopt it, it needs special efforts and once

adopted it leads to developing "hose companies which really need progress, have highethical values and need to run long run business they abide and comply with laws of

-ecurities E=change Aoard f ndia &-EA', %oreign E=change Regulation 3ct,

Competition 3ct ?BB?, Cyber ;aws, Aanking ;aws etc.

. 1isclosure, transparency, and accountability> 1isclosure, transparency and

accountability are important aspect for good governance. "imely and accurate

information should be disclosed on the matters like the financial position, performanceetc. "ransparency is needed in order that government has faith in corporate bodies and

conse Every Corporate body needs to take risk of innovation i.e. innovation in

products, in services and it plays a pivotal role in corporate governance.

. 0ecessity of udicial Reform "here is necessity of *udicial reform for a good economy

and also in today!s changing time of globali$ation and liberali$ation. ur *udicial system

though having performed salutary role all these years, certainly are becoming obsolete


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and outdated over the years. "he delay in *udiciary is due to several interests involved in

it. Aut then with changing scenario and fast growing competition, the *udiciary needs to

bring reforms accordingly. t needs to speedily resolve disputes in cost effective manner.

H. Globali$ation helping ndian Companies to become global giants based on good

governance> n today!s age of competition and due to globali$ation our several ndianCorporate bodies are becoming global giants which are possible only due to good

corporate governance.

6. ;essons from Corporate %ailureI7J> Every story has a moral to learn from, every

failure has success to learn from, in the same way, corporate body have certain policies

which if goes as a failure they need to learn from it. %ailure can be both internal as well

as e=ternal whatever it may be, in good governance, corporate bodies need to learn fromtheir failures and need to move to the path of success.

Mainly we will deal with the perspectives of corporate governance from three points of

view>5. -hareholders &Capital Market' K Control perspective

?. rgani$ation &Management' K Control perspective

@. -takeholders L Control perspective

5. -hareholders> as providers of a risk capital have final control on resource allocation

decisions.

?. rgani$ation> have the main purpose is to control i.e. through skills, intelligence,innovation, ideas, professionalism etc. "herefore, here in this perspective, resource

allocation decision should rest with them.

@. -takeholders> here, it says that for long term business, only shareholders valuema=imi$ation should not be seen as sole goal but it should be for well being of all groups

with stake of long run of business and it should be goal of corporate governance.

%uture prospect of corporate governance

ndia has become one of the fastest emerging nations to have aligned itself with the

international trends in Corporate Governance. 3s a result, ndian companies haveincreasingly been able to access to newer and larger markets around the world) as well as

able to ac


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1irectories, shareholders rights, etc. "here have been many instances of failure and

scams in the corporate sector, like collusion between companies and their accounting

firms, presence of weak or ineffective internal audits, lack of re

corporate governancee

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