1code of corporate governance.ppt
-
Upload
khawaja-faisal-rasheed -
Category
Documents
-
view
21 -
download
0
description
Transcript of 1code of corporate governance.ppt
What is Corporate Governance?
Faisal Rasheed
Corporate Governance
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed
Corporate Governance
There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom). In 2002, the U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance
Corporate Governance Parties
Shareholders – those that own the company
Directors – Guardians of the Company’s assets for the Shareholders
Managers who use the Company’s assets
Corporate Governance
Primarily concerned with public listed companies i.e. those listed on a Stock Exchange
Focused on preventing corporate collapses such as Enron, Polly Peck and the Maxwell companies
Four Pillars of Corporate Governance
Accountability
Fairness
Transparency
Independence
Accountability
Ensure that management is accountable to the Board
Ensure that the Board is accountable to shareholders
Fairness
Protect Shareholders rights
Treat all shareholders including minorities, equitably
Provide effective redress for violations
Transparency
Ensure timely, accurate disclosure on all material matters, including the financial situation,
performance, ownership and corporate governance
Independence
Procedures and structures are in place so as to minimise, or avoid completely conflicts of interest
Independent Directors and Advisers i.e. free from the influence of others
Elements of Corporate Governance
Good Board practices
Control Environment
Transparent disclosure
Well-defined shareholder rights
Board commitment
Good Board Practices
Clearly defined roles and authorities
Duties and responsibilities of Directors understood
Board is well structured
Appropriate composition and mix of skills
Good Board procedures
Appropriate Board procedures
Director Remuneration in line with best practice
Board self-evaluation and training conducted
Control Environment
Internal control procedures
Risk management framework present
Disaster recovery systems in place
Control Environment
Business continuity procedures in place
Independent external auditor conducts audits
Independent audit committee established
Control Environment
Internal Audit Function
Management Information systems established
Compliance Function established
Transparent Disclosure
Financial Information disclosed
Non-Financial Information disclosed
Financials prepared according to International Financial Reporting Standards (IFRS)
Transparent Disclosure
Companies Registry filings up to date
High-Quality annual report published
Web-based disclosure
Well-Defined Shareholder Rights
Minority shareholder rights formalised
Well-organised shareholder meetings conducted
Policy on related party transactions
Well-Defined Shareholder Rights
Policy on extraordinary transactions
Clearly defined and explicit dividend policy
Board Commitment
Policies and procedures have been formalised and distributed to relevant staff
A corporate governance code has been developed
A code of ethics has been developed The company is recognised as a corporate
governance leader
Other Entities
Corporate Governance applies to all types of organisations not just companies in the private sector but also in the not for profit and public sectors
Examples are NGOs, schools, hospitals, pension funds, state-owned enterprises
3. EXPERIENTIAL LEARNING ASIA
3. Pakistan
First Code of Corporate Governance SECP With Assistance from;
1. ICAP2. Stakeholders
Sound Corporate Practices
3. EXPERIENTIAL LEARNING ASIA
3. Pakistan
B: Applicable to:1. Listed Companies 2. Banking Companies3. NBFIs4. Insurance Companies 5. Mutual Funds6. Unit Trusts 7. Companies/Corporations held or controlled by
the Government
3. EXPERIENTIAL LEARNING ASIA
3. Pakistan
C: Constituents: 1. Directors • BOD• Qualifications and Eligibility• Tenure• Responsibilities, Powers and Functions of BOD• Meetings• Key Information
3. EXPERIENTIAL LEARNING ASIA
3. Pakistan C: Constituents:
2. CFO & Secretary • Qualifications • Attendance of Board Meetings
3. Corporate & Financial Reporting Framework • Directors Report to Shareholders• Frequency of Financial Reporting • Responsibility for Financial Reporting & Corporate
Compliance• Disclosure of interest by a Director holding
company’s shares
3. EXPERIENTIAL LEARNING ASIA
3. Pakistan C: Constituents:
3. Corporate & Financial Reporting Framework • Auditors not to hold shares • Corporate ownership structure • Divesture of shares by sponsors/controlling
interest4. Audit Committee• Committee • Frequency of meetings • Attendance at meetings • Terms of reference
3. EXPERIENTIAL LEARNING ASIA
3. Pakistan
C: Constituents: 4. Audit Committee• Reporting procedure • Internal Audit5. External Auditors