Post on 18-Nov-2014
description
CORPORATE GOVERNANCE
Corporate Governance
What is Corporate Governance ?
Corporate Governance refers to the structures & Corporate Governance refers to the structures &
processes for the efficient & proper direction & control processes for the efficient & proper direction & control
of companies (both private and public) in the interest of of companies (both private and public) in the interest of
all stakeholdersall stakeholders.
CORPORATE GOVERNANCE
What is Corporate Governance ?
- Is a concept; one size does not fit all, HOWEVER:
- Basic Principles of Corporate Governance:
AccountabilityAccountability Rights of ShareholdersRights of Shareholders
TransparencyTransparency Interests of StakeholdersInterests of Stakeholders
FairnessFairness Good FaithGood Faith DiligenceDiligence
IntegrityIntegrity TrustTrust DisclosureDisclosure
ResponsibilityResponsibility ControlsControls CommitmentCommitment
CORPORATE GOVERNANCE
Corporate Governance Framework
Governance Principles
Legal / RegulatoryLegal / Regulatory
Codes of Best PracticeCodes of Best Practice
Stakeholder RelationsStakeholder Relations
Self RegulationSelf Regulation
Ethical StandardsEthical Standards
Risk ManagementRisk Management
CORPORATE GOVERNANCE
Why Corporate Governance Matters• 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 societiesBetter companies, Better societies..
CORPORATE GOVERNANCE
“ “ The proper governance of companies will become as crucial The proper governance of companies will become as crucial
to the world economy as the proper governing of countries”.to the world economy as the proper governing of countries”.
Good Corporate Governance and GoodPublic Governance are complementary
James WolfensohnPresident of WB, 1999
CORPORATE GOVERNANCE
Corporate Governance-Channel of Growth & Development
Country level
Sector level
Individual firms
CORPORATE GOVERNANCE
• Increases access to external financing leading to larger
investment, high growth & creation of more jobs
• Better allocation of resources
• Better management creating wealth
• Reduces the risk of financial crisis
• Better relationship with all stakeholders
Corporate Governance-Channel of Growth & Development
CORPORATE GOVERNANCE
• Generally derived from the private sector
• Ensures public accountability
• Promotes responsive and accountable institutions
• Good financial management of resources
• Good stewardship –
– Responsibility to protect the wealth of the state and its citizens
– Maintain and safeguard it in the interest of the citizens
Corporate Governance-Principles for the Public Sector
CORPORATE GOVERNANCE
• Good Governance by Host Country
• Good Governance by Private Sector
• Good Governance by Investment Promotion Agencies
• Good Governance by Investors
Good Corporate Governance, Good Government & Good Business go hand in hand
CORPORATE GOVERNANCE
Transparent, stable and predictable investment climate:
• Appropriate legislation to support investment
• Anti corruption measures
• Effective , speedy and transparent resolution of disputes
• Forum for Investors
• Capacity Building
Good Governance by Host Country
CORPORATE GOVERNANCE
• Institutional Framework
• Role of Board of Directors
• Management
• Risk factors
• Transparency & Disclosure
• Reputation
Good Governance by Private Sector
CORPORATE GOVERNANCE
• Self Regulation
• Transparency & Disclosure
• Accountability
• Commitment
• Sound and Clear Administrative Policies
• Stakeholder engagement
Good Governance by Investment Promotion Agencies
CORPORATE GOVERNANCE
• Good faith
• Business Integrity
• Governance Policies
• Human Capital
• Corruption Practices
Good Governance by Foreign Investor
CORPORATE GOVERNANCE
• Continued advocacy on the benefits of Corporate Governance
• Codes of Corporate Governance for countries
• Capacity building
• Sourcing of funds to support Corporate Governance
development.
• Every institution , every stakeholder should provide input into
the corporate governance agenda
Recommendations
CORPORATE GOVERNANCE
“ “ If a country does not have a reputation for strong corporate governance If a country does not have a reputation for strong corporate governance
practice, capital will flow elsewhere. If investors are not confident with the level practice, capital will flow elsewhere. If investors are not confident with the level
of disclosure, capital will flow elsewhere. If a country opts for lax accounting and of disclosure, capital will flow elsewhere. If a country opts for lax accounting and
reporting standards, capital will flow elsewhere. All enterprises in that country- reporting standards, capital will flow elsewhere. All enterprises in that country-
regardless of how steadfast a particular company’s practices may be- suffer the regardless of how steadfast a particular company’s practices may be- suffer the
consequences. Markets exist by the grace of investors. And it is today’s more consequences. Markets exist by the grace of investors. And it is today’s more
empowered investors that will determine which companies and markets will empowered investors that will determine which companies and markets will
stand the test of time and endure the weight of greater competition. It serves us stand the test of time and endure the weight of greater competition. It serves us
well to remember that no market has a divine right to investors’ capitalwell to remember that no market has a divine right to investors’ capital
Conclusion