5. Corporate Governance FILE

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Corporate Governance

MEANING

Corporate Governance refers to the way a corporation is governed. It is the technique by which

companies are directed and managed. It means carrying the business as per the stakeholders

desires. It is actually conducted by the board of Directors and the concerned committees for the

companys stakeholders benefit. It is all about balancing individual and societal goals, as well

as, economic and social goals.

Corporate Governance is the interaction between various participants shareholders, board of

directors, and companys management! in shaping corporations performance and the way it is

proceeding towards. "he relationship between the owners and the managers in an organi#ation

must be healthy and there should be no conflict between the two. "he owners must see that

individuals actual performance is according to the standard performance. "hese dimensions of

corporate governance should not be overlooked.

Corporate Governance has a broad scope. It includes both social and institutional aspects.

Corporate Governance encourages a trustworthy, moral, as well as ethical environment.

DEFINITION

Corporate governance is $accountability to providers of capital.% & 'ruce (eber, dean of the

)erner College of 'usiness at the *niversity of Delaware, at the inaugural meeting in +ovember

of the newly reconstituted advisory board for the ohn ). (einberg Center for Corporate

Governance.

Corporate governance is about $how investors get the managers to give them back their money%

-hleifer /ishny, $0 -urvey of Corporate Governance,% ournal of 1inance 233! 45567 689!

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Corporate governance is gathering together a group of smart, accomplished people around a

board table to make good decisions on behalf of the company and its stakeholders. & 0s (e

-tart 0new, im :ristie, editor and associate publisher of Directors 'oards.

IMPORTANCE

"he importance of corporate governance is listed below7

4. Changing Ownership Structure7 In recent years, the ownership structure of companies

has changed a lot. ;ublic financial institutions, mutual funds, etc. are the single largest

shareholder in most of the large companies. -o, they have effective control on the management

of the companies. "hey force the management to use corporate governance. "hat is, they put

pressure on the management to become more efficient, transparent, accountable, etc. "he also

ask the management to make consumer


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2. G!o"a!isation7 "oday most big companies are selling their goods in the global market .

-o, they have to attract foreign investor and foreign customers. "hey also have to follow

foreign rules and regulations. 0ll this requires corporate governance. (ithout Corporate

governance, it is impossible to enter, survive and succeed the global market.

@. Ta%eovers an$ Mergers7 "oday, there are many takeovers and mergers in thebusiness

world. Corporate governance is required to protect the interest of all the parties during

takeovers and mergers.

6. SE&I7 -A'Ihas made corporate governance compulsory for certain companies. "his is

done to protect the interest of the investors and other stakeholders.

Principles of Corporate Governance

Shareho!$er recognitionis key to maintaining a companys stock price. =ore often than

not, however, small shareholders with little impact on the stock price are brushed aside to make

way for the interests of maBority shareholders and the e?ecutive board. Good corporate

governance seeks to make sure that all shareholders get a voice at general meetings and are

allowed to participate.

Sta%eho!$er interestsshould also be recogni#ed by corporate governance. In particular,

taking the time to address non


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'usiness transparenc# is the key to promoting shareholder trust. 1inancial records,

earnings reports and forward guidance should all be clearly stated without e?aggeration or

$creative% accounting. 1alsified financial records can cause your company to become a ;on#i

scheme, and will be dealt with accordingly.

&eneits o Corporate Governance

4. Good corporate governance ensures corporate success and economic growth.

3. -trong corporate governance maintains investors confidence, as a result of which,

company can raise capital efficiently and effectively.

8. It lowers the capital cost.

>. "here is a positive impact on the share price.

2. It provides proper inducement to the owners as well as managers to achieve obBectives

that are in interests of the shareholders and the organi#ation.

@. Good corporate governance also minimi#es wastages, corruption, risks and

mismanagement.

6. It helps in brand formation and development.

9. It ensures organi#ation in managed in a manner that fits the best interests of all.

Disa$vantages o Corporate Governance

Corporate governance is the method by which a corporation is directed, its business practices

controlled, and its vision for success communicated to its shareholders. Disadvantages of this

method of leadership arise from a lack of oversight, sentimental business decisions by an

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entrenched board of directors, and the high cost of changing direction once a business path

proves to be ineffective.

Family-Owned Companies

Corporate governance works at its best when shareholders and board members are able to make

obBective decisions that are in the best interest of the company. 0ccording to Ibis 0ssociates, a

business planning firm, family


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Securities E'change &oar$ o In$ia

INTROD(CTION

-ecurities A?change 'oard of India -A'I! was set up in 4599 to regulate the functions of

securities market. -A'I promotes orderly and healthy development in the stock market but

initially -A'I was not able to e?ercise complete control over the stock market transactions. Itwas left as a watch dog to observe the activities but was found ineffective in regulating and

controlling them. 0s a result in =ay 4553, -A'I was granted legal status. -A'I is a body

corporate having a separate legal e?istence and perpetual succession.

#


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Reasons or Esta"!ishment o SE&I)

(ith the growth in the dealings of stock markets, lot of malpractices also started in stock markets

such as price rigging, Funofficial premium on new issue, and delay in delivery of shares,

violation of rules and regulations of stock e?change and listing requirements. Due to these

malpractices the customers started losing confidence and faith in the stock e?change. -o

government of India decided to set up an agency or regulatory body known as -ecurities

A?change 'oard of India -A'I!.

*istor#

It was established by "he Government of Indiaon 43 0pril 4599 and given statutory powers in

4553 with -A'I 0ct 4553 being passed by the Indian ;arliament. -A'I has its headquarters at

the business district of 'andra :urla Comple?in =umbai, and has +orthern, Aastern, -outhern

and (estern egional Hffices in+ew Delhi, :olkata,Chennaiand0hmedabadrespectively. It

has opened local offices at aipur and 'angalore and is planning to open offices at Guwahati,

'hubaneshwar, ;atna, :ochi and Chandigarh in 1inancial ear 348 < 34>.

Controller of Capital Issues was the regulatory authority before -A'I came into e?istenceJ it

derived authority from the Capital Issues Control! 0ct, 45>6.

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https://en.wikipedia.org/wiki/Government_of_Indiahttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Bandra_Kurla_Complexhttps://en.wikipedia.org/wiki/Mumbaihttps://en.wikipedia.org/wiki/New_Delhihttps://en.wikipedia.org/wiki/New_Delhihttps://en.wikipedia.org/wiki/Kolkatahttps://en.wikipedia.org/wiki/Kolkatahttps://en.wikipedia.org/wiki/Chennaihttps://en.wikipedia.org/wiki/Chennaihttps://en.wikipedia.org/wiki/Ahmedabadhttps://en.wikipedia.org/wiki/Ahmedabadhttps://en.wikipedia.org/wiki/Government_of_Indiahttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Bandra_Kurla_Complexhttps://en.wikipedia.org/wiki/Mumbaihttps://en.wikipedia.org/wiki/New_Delhihttps://en.wikipedia.org/wiki/Kolkatahttps://en.wikipedia.org/wiki/Chennaihttps://en.wikipedia.org/wiki/Ahmedabad


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Initially -A'I was a non statutory body without any statutory power. Kowever in 4552, the -A'I

was given additional statutory power by the Government of India through an amendment to the

-ecurities and A?change 'oard of India 0ct, 4553. In 0pril 4599 the -A'I was constituted as the

regulator of capital markets in India under a resolution of the Government of India.

Managament o SE&I

"he -A'I is managed by its members, which consists of following7

4. "he chairman who is nominated by *nion Government of India.

3. "wo members, i.e., Hfficers from *nion 1inance =inistry.

8. Hne member from the eserve 'ank of India.

>. "he remaining five members are nominated by *nion Government of India, out of them

at least three shall be whole. "o regulate and develop a code of conduct for intermediaries such as brokers,

underwriters, etc.

Functions o SE&I)

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"he -A'I performs functions to meet its obBectives. "o meet three obBectives -A'I has

three important functions. "hese are7i. ;rotective functions

ii. Developmental functions

iii. egulatory functions.

+, Protective Functions)"hese functions are performed by -A'I to protect the interest of investor and provide

safety of investment.

As protective unctions SE&I perorms o!!owing unctions)

0i1 It Chec%s Price Rigging)

;rice rigging refers to manipulating the prices of securities with the main obBective of

inflating or depressing the market price of securities. -A'I prohibits such practice

because this can defraud and cheat the investors.

0ii1 It Prohi"its Insi$er tra$ing)

Insider is any person connected with the company such as directors, promoters etc. "heseinsiders have sensitive information which affects the prices of the securities. "his

information is not available to people at large but the insiders get this privileged

information by working inside the company and if they use this information to make

profit, then it is known as insider trading, e.g., the directors of a company may know that

company will issue 'onus shares to its shareholders at the end of year and they purchase

shares from market to make profit with bonus issue. "his is known as insider trading.

-A'I keeps a strict check when insiders are buying securities of the company and takes

strict action on insider trading.

0iii1 SE&I prohi"its rau$u!ent an$ (nair Tra$e Practices)

-A'I does not allow the companies to make misleading statements which are likely to

induce the sale or purchase of securities by any other person.

0iv1-A'I undertakes steps to educate investors so that they are able to evaluate the

securities of various companies and select the most profitable securities.

0v1 -A'I promotes fair practices and code of conduct in security market by taking

following steps7

a! -A'I has issued guidelines to protect the interest of debenture


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"hese functions are performed by the -A'I to promote and develop activities in stock

e?change and increase the business in stock e?change. *nder developmental categories

following functions are performed by -A'I7

i! -A'I promotes training of intermediaries of the securities market.

ii! -A'I tries to promote activities of stock e?change by adopting fle?ible and adoptableapproach in following way7

a! -A'I has permitted internet trading through registered stock brokers.

2. b! -A'I has made underwriting optional to reduce the cost of issue.c! Aven initial public offer of primary market is permitted through stock e?change.

., Regu!ator# Functions)

"hese functions are performed by -A'I to regulate the business in stock e?change. "o

regulate the activities of stock e?change following functions are performed7

i! -A'I has framed rules and regulations and a code of conduct to regulate the

intermediaries such as merchant bankers, brokers, underwriters, etc.

ii! "hese intermediaries have been brought under the regulatory purview and private

placement has been made more restrictive.iii! -A'I registers and regulates the working of stock brokers, sub


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Powers re!ating to stoc% e'changes 2 interme$iaries

-A'I has wide powers regarding the stock e?changesand intermediaries dealing in securities. Itcan ask information from the stock e?changes and intermediaries regarding their business

transactions for inspection or scrutiny and other purpose.

-, Power to impose monetar# pena!ties

-A'I has been empowered to impose monetary penalties on capital market intermediaries and

other participants for a range of violations. It can even impose suspension of their registration for

a short period.

., Power to initiate actions in unctions assigne$

-A'I has a power to initiate actions in regard to functions assigned. 1or e?ample, it can issue

guidelines to different intermediaries or can introduce specific rules for the protection of interests

of investors.

3, Power to regu!ate insi$er tra$ing

-A'I has power to regulate insidertrading or can regulate the functions of merchant bankers.

4, Powers un$er Securities Contracts Act

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1or effective regulation of stock e?change, the =inistry of 1inance issued a +otification on 48

-eptember, 455> delegating several of its powers under the -ecurities Contracts egulations!

0ct to -A'I.

-A'I is also empowered by the 1inance =inistry to nominate three members on the Governing

'ody of every stock e?change.

4, Power to regu!ate "usiness o stoc% e'changes

-A'I is also empowered to regulate the business of stock e?changes, intermediaries associated

with the securities market as well as mutual funds, fraudulent and unfairtrade practices relatingto securities and regulation of acquisition of shares and takeovers of companies.

5imitations o SE&I

L "he Central Government has authori#ed -A'I to frame its rules and regulation for actively

monitoring capital markets. "hese rules and regulations will have to be approved by the

government first."his will cause unnecessary delay and interference by the 1inance

=inister.

L -A'I will have to seek prior approval for filling criminal complaints for violations for the

regulations. "his will again cause delay at government level.

L -A'I has not been given autonomy. Its 'oard of Directors is dominated by government

nominees. Hut of 2 directors only 3 can be from outside and these are to represent the

=inistries of 1inance, )aw and eserve 'ank of India.

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RO5E OF &OARD OF DIREECTORS

MEANING

0 "oar$ o $irectors is a body of elected or appointed members who Bointly oversee the

activities of a company or organi#ation. Hther names include "oar$ o governors, "oar$ o

managers, "oar$ o regents, "oar$ otrustees, and "oar$ o visitors. It is often simply

referred to as Ethe boardE.

0 boards activities are determined by the powers, duties, and responsibilities delegated to it or

conferred on it by an authority outside itself. "hese matters are typically detailed in the

organi#ationsbylaws."he bylaws commonly also specify the number of members of the board,

how they are to be chosen, and when they are to meet. Kowever, these bylaws rarely address a

boards powers when faced with a corporate turnaround or restructuring, where board members

need to act as agents of change in addition to their traditional fiduciary responsibilities.

In an organi#ation with voting members, the board acts on behalf of, and is subordinate to, the

organi#ations full group, which usually chooses the members of the board. In a stock

corporation, the board is elected by the shareholders and is the highest authority in the

management of the corporation. In a non


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Purpose o a &oar$ o Directors

General Purpose

+onprofits endeavor to represent the publics best interests, and whether they focus on issues

such as health, education, social welfare or global humanitarian outreach, the primary purposes

of the board of directors is to ensure the organi#ation is on track with regard to meeting its goals,

as well as to craft policies in support of those goals. +onprofit organi#ations are operated by twodistinct groups7 the board of directors, which determines policies and plans, and the organi#ation

staff, which carries out plans and implements policies.

(irin! t)e *op E+ecutive

0s most boards are focused on big


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as interacting with the public to promote the organi#ation, reporting on its progress, conducting

interviews and participating in fund


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1inancial matters are of utmost concern to a nonprofit, which primarily relies on voluntary

donations to fund its efforts. "he board of directors must determine how to budget and disperse

these funds in such a manner that supports their overarching missions. 0mnesty International, for

e?ample, focuses on eliminating human rights abuses across the globe. "he board must,

therefore, include such tasks as advertising and public relations to elevate global awareness of

0mnesty Internationals goals and raise funds


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3! "he 'oard of Directors of a company shall e?ercise the following powers on behalf

of the company by means of resolutions passed at meetings of the 'oard, namely7&

a! "o make calls on shareholders in respect of money unpaid on their sharesJ

b! "o authorise buy


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credit or otherwise and not the actual day


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transactions, whether related or not, in one or more financial years as regulated in the

0rticles of 0ssociation of the CompanyJ

f. Kold a General =eeting of -hareholders including to send invitations or summons to the

shareholders! either annually or e?traordinary as necessary or requested by certain

-hareholders, Commissioners or Directors of the Company as regulated in the 0rticles of

0ssociation of the CompanyJ

g. +otify the =inister of )aw and Kuman ights the E=)KE! of any change to the

composition of the 'oards of Directors or Commissioners of the Company within 8

days as of the date of the resolution of the General =eeting of -hareholders with regard

to the changeJ

h. ecord any transfer of shares or encumbrance of shares! in the Company in the

Company egister and notify the =)K regarding the change of the shareholders within

8 days as of the date of the transfer of sharesJ

i. +otify the creditors of the Company if there is a reduction in the capital of the Company

in at least one newspaper within 6 days of the resolution of the General =eeting of

-hareholders regarding the reduction.

0lso, in certain transactions such as the merger, acquisition, consolidation, segregation or

dissolution of the Company, the 'oard of Directors also has a number of obligations regarding

the transaction, such as to prepare the transaction plan, announce the proposed transaction in the

newspapers, or act as the liquidator in the dissolution of the Company.

1&


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CORPORATE SOCIA5 RESPONSI&I5IT7

MEANING

0 companys sense of responsibility towards the communityand environmentboth ecological

and social! in which it operates. Companiese?press this citi#enship through their wasteand

pollutionreductionprocesses, by contributing educational and socialprograms,and byearning

adequatereturnson the employedresources...

DEFINITION

8Carro!!9 +:;:< -==>9 ?==@7 E"he social responsibility of business encompasses the economic,

legal, ethical and discretionary e?pectations that a society has of organi#ations at a given point in

time.E

E( Deinition o CSR) E0 concept whereby companies integrate social and environmental

concerns in their business operations and in their interaction with their stakeholders on a

voluntary basis.E

Ma!!en"a%er Deinition) EC- is about how companies manage the business processes to

produce an overall positive impact on societyE

The 6or!$ &usiness Counci! or Sustaina"!e Deve!opment 06&CSD1) ECorporate -ocial

esponsibility is the continuing commitment by business to behave ethically and contribute to

economic development while improving the quality of life of the workforce and their families as

well as of the local community and society at largeE.

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http://www.businessdictionary.com/definition/responsibility.htmlhttp://www.businessdictionary.com/definition/community.htmlhttp://www.businessdictionary.com/definition/environment.htmlhttp://www.businessdictionary.com/definition/operate.htmlhttp://www.businessdictionary.com/definition/company.htmlhttp://www.businessdictionary.com/definition/citizenship.htmlhttp://www.businessdictionary.com/definition/waste.htmlhttp://www.businessdictionary.com/definition/pollution.htmlhttp://www.businessdictionary.com/definition/reduction.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/program.htmlhttp://www.businessdictionary.com/definition/earnings.htmlhttp://www.businessdictionary.com/definition/adequate.htmlhttp://www.businessdictionary.com/definition/returns.htmlhttp://www.businessdictionary.com/definition/employment.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/responsibility.htmlhttp://www.businessdictionary.com/definition/community.htmlhttp://www.businessdictionary.com/definition/environment.htmlhttp://www.businessdictionary.com/definition/operate.htmlhttp://www.businessdictionary.com/definition/company.htmlhttp://www.businessdictionary.com/definition/citizenship.htmlhttp://www.businessdictionary.com/definition/waste.htmlhttp://www.businessdictionary.com/definition/pollution.htmlhttp://www.businessdictionary.com/definition/reduction.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/program.htmlhttp://www.businessdictionary.com/definition/earnings.htmlhttp://www.businessdictionary.com/definition/adequate.htmlhttp://www.businessdictionary.com/definition/returns.htmlhttp://www.businessdictionary.com/definition/employment.htmlhttp://www.businessdictionary.com/definition/resource.html


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FEAT(RES OF CSR

Corporate -ocial esponsibility shows these basic features 7

Intentional, proactive and voluntary activities

0ll beyond the duties defined by law

-uitable for all types of companies M organi#ations

(in


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to the bottom. 0s a business meets lower


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Envirinmenta! issues

Environmenta! issuesare harmful effects of human activity on the biophysical environment.

Anvironmentalism, a social and environmenta! movement, addresses environmenta! issues

through advocacy, education and activism.

Environmenta! Pro"!ems

Hur environment is constantly changing. "here is no denying that. Kowever, as our environment

changes, so does the need to become increasingly aware of the problems that surround it. (ith a

massive influ? of natural disasters, warming and cooling periods, different types of weather

patterns and much more, people need to be aware of what types of environmental problems our

planet is facing.

Global warming has become an undisputed fact about our current livelihoodsJ our planet is

warming up and we are definitely part of the problem. Kowever, this isnt the only

environmental problem that we should be concerned about. 0ll across the world, people are

facing a wealth of new and challenging environmental problems every day. -ome of them are

small and only affect a few ecosystems, but others are drastically changing the landscape of what

we already know.

Hur planet is poised at the brink of a severe environmental crisis. Current environmental

problems make us vulnerable to disasters and tragedies, now and in the future. (e are in a state

of planetary emergency, with environmental problems piling up high around us. *nless we

address the various issues prudently and seriously we are surely doomed for disaster. Current

environmental problems require urgent attention.

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Ma/or Current Environmenta! Pro"!ems

+, Po!!ution);ollution of air, water and soil require millions of years to recoup. Industry and

motor vehicle e?haust are the number one pollutants. Keavy metals, nitrates and plastic are

to?ins responsible for pollution. (hile water pollution is caused by oil spill, acid rain, urban

runoffJ air pollution is caused by various gases and to?ins released by industries and factories

and combustion of fossil fuelsJ soil pollution is maBorly caused by industrial waste that deprives

soil from essential nutrients.

-, G!o"a! 6arming)Climate changes like global warming is the result of human practices like

emission of Greenhouse gases. Global warming leads to rising temperatures of the oceans and

the earth surface causing melting of polar ice caps, rise in sea levels and also unnatural patterns

of precipitation such as flash floods, e?cessive snow or desertification.

., Overpopu!ation)"he population of the planet is reaching unsustainable levels as it faces

shortage of resources like water, fuel and food. ;opulation e?plosion in less developed and

developing countries is straining the already scarce resources. Intensive agriculture practiced to

produce food damages the environment through use of chemical fertili#er, pesticides and

insecticides. Hverpopulation is one of the crucial current environmental problem,

3, Natura! Resource Dep!etion) +atural resource depletion is another crucial current

environmental problems. 1ossil fuel consumption results in emission of Greenhouse gases,

which is responsible for global warming and climate change. Globally, people are taking efforts

to shift to renewable sources of energy like solar, wind, biogas and geothermal energy. "he cost

of installing the infrastructure and maintaining these sources has plummeted in the recent years.

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?, 6aste Disposa!)"he over consumption of resources and creation of plastics are creating a

global crisis of waste disposal. Developed countries are notorious for producing an e?cessive

amount of waste or garbage and dumping their waste in the oceans and, less developed countries.

+uclear waste disposal has tremendous health ha#ards associated with it. ;lastic, fast food,

packaging and cheap electronic wastes threaten the well being of humans. (aste disposal is one

of urgent current environmental problem,

4, C!imate Change)Climate change is yet another environmental problem that has surfaced in

last couple of decades. It occurs due to rise in global warming which occurs due to increase in

temperature of atmosphere by burning of fossil fuels and release of harmful gases by industries.

Climate change has various harmful effects but not limited to melting of polar ice, change in

seasons, occurrence of new diseases, frequent occurrence of floods and change in overall

weather scenario.

;, 5oss o &io$iversit#)Kuman activity is leading to the e?tinction of species and habitats and

and loss of bio


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Increase customer retention

Develop and enhance re!ationshipswith customers, suppliers and networks

0ttract, retain and maintain a happ# wor%orceand be an Emp!o#er o Choice

Save mone#on energy and operating costs and manage risk

Dierentiate #ourse! rom #our competitors

Generate innovation and learning and enhance #our in!uence

Improve #our "usiness reputationand standing

;rovide access to investmentandun$ing opportunities

Generate positive pu"!icit# and media opportunities due to media interest in ethical

business activities.

Disa$vantages O CSR

Corporate -ocial esponsibility calls for organi#ations to consider the companys impact on

society and the environment as they conduct business. "hough noble in principle and profitablein some industries, C- has a number of detractors who point out the disadvantages of

implementing socially responsible practices.

,)are)older nterests

Corporate social responsibility often requires changes to a number of processes, as well as

increased reporting. In many cases, businesses hire additional personnel to manage C-

initiatives. "hese actions come at a cost, and opponents point out that the mone# spent on CSR

comes $irect!# rom shareho!$ers poc%ets. 1ormer investment banker and current "ulane

*niversity professor Alaine -ternberg, one of the most vocal opponents of the effects of C- on

shareholder profits, points out that C- initiatives incur great cost with little measurable return.

Corporate 0eputation

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(hile many businesses undertake C- initiatives with the intent of bolstering their public

images, these initiatives can sometimes require a company to release information that has an

opposite effect. In 38, for e?ample, Coca


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Teachings rom scripture an$ Tra$itionB

INTROD(CTION

India is a country of high values and ethics. It is a land where people of all religion and

culture ,with difference in language, beliefs, social background stay together. (e see that various

scripture written by great men of ancient time, of all the religious backgrounds, speak more or

less of the same concept. 0ll scriptures are inspired by God and are useful for teaching, for

refutation, for correction, and for training in righteousness, so that one who belongs to God may

be competent , equipped for every work.

6*AT T*E &I&5E REA557 MEANS

$'ible% from Greek $biblia% meaning books!

Kas a lot to contribute to the teaching in management.

Anables people to live according to Gods will.

Hver > human authors.

+ot a history book or scientific book.

TEAC*INGS OF T*E &I&5E ON MANAGEMENT

2%


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O "eaching of the bible on management are as follows 7

O -"A-- =0+0GA=A+"

O "I=A =0+0GA=A="

Stress Management)

It teaches and tries to bring tension down to a controllable si#e. It focuses on the following

areas to manage stress at work 7

The o!!owing areas to manage stress at wor%)

a! Anvironment7 when people interact with environment variables in the social, physical

and spiritual world, they may get stressed up.

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b! =ental Hutlook7 ;eople develop attitude, beliefs and values over a period of time which

they use to interpret events in their social and spiritual environment.

c! (rong ;erceptions7 sometimes employees develop notions about what their superiors think

of them.

d! Imagined "hreat7 =any workers have threats of insecurity in their minds.

This threats can "e overcome in the o!!owing wa#s)

;eople should write down the imaginary threats on paper and save it for three to four

months.

1or every Fwhat if situation, there is a Fso what solution. ;eople should ask themselves

Fwhat if the boss scold me and look for answer like $so what%.

Change towards outlook on life and faith in God help to make people happy and patient.

TIME MANAGEMENT)

"he 'ible is an important source for teaching techniques for time management. -ome of the

issues involved in time management are7

3'


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RAMA7ANA

INTROD(CTION

"here are number of books, ournals and articles available, which talks about various

management theories. "hey focused management as a F-cience and an F0rt of life.

'ut the way before modern days management gurus gave their theories, principles and

concepts of management the great writers like "ulsidas, /almiki had e?plained them in the

ancient Kindu epic amayana.

CONCEPT

amayana, the great epics of India, have captivated the hearts of its people for several

millennia.

Is an ancient -anskrit epic attributed to the poet /almiki and is an important part of the

Kindu canon.

"he name Famayana is a tatpurusa compound of ama and ana $going, advancing

,translating to the $ravels of ama%.

"he amayana consist of 3> verses in seven cantos and tell the story of a ;rince,

ama Hf 0yodhya, whose wife -ita was abducted by the demon king of )anka, avana.

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PRO&5EMS

0t the time when ama, )akshman and -ita banished to forest unfortunately -ita was

kidnapped by avana.

H'AC"I/A

"he challenge for )ord ama how he defeats

avana and gets back his wife -ita with the help of /anar sena

Teaching rom Rama#ana

Is a Kindu epic which was set in the "retayug.

Is a tale of good vs. evil.

Is concerned with right actions and their consequences.

"he duties and responsibility of each others relationships.

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RAMA7ANA !essons

CONC5(SION

+ever make promise, once you make promise never break it.

)eadership, Communication power, "eam work, Innovation, Devotion )oyalty.

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+ever step back to avoid risk because you cant avoid them. 'ut take them as challenges

they make you strong.

0ppreciate people for their work whether it is small or large. ou need not pay anything

to talk good to somebody.

A5(E AND A5(E S7STEM

0 personal va!ue is an individuals absolute or relative and ethical value, the assumption of

which can be the basis for ethical action. 0 value system is a set of consistent values and

measures. 0principle valueis a foundation upon which other values and measures of integrityare based.

-ome values are physiologically determined and are normally considered obBective, such as a

desire to avoid physical pain or to seek pleasure. Hther values are considered subBective,vary

across individuals and cultures, and are in many ways aligned with beliefand belief systems.

"ypes of values include ethicalMmoral values, doctrinalMideological religious, political! values,

social values, and aesthetic values. It is debated whether some values that are not clearly

physiologically determined, such as altruism, are intrinsic, and whether some, such as

acquisitiveness, should be classified as vices or virtues. /alues have been studied in various

disciplines7 anthropology, behavioral economics, business ethics, corporate governance, moral

philosophy,political sciences, social psychology, sociologyand theologyto name a few.

34
https://en.wikipedia.org/wiki/Individualhttps://en.wikipedia.org/wiki/Individualhttps://en.wikipedia.org/wiki/Individualhttps://en.wikipedia.org/wiki/Value_(ethics)#Absolute_or_relativehttps://en.wikipedia.org/wiki/Value_systemhttps://en.wikipedia.org/wiki/Value_(ethics)https://en.wikipedia.org/wiki/Principle_valuehttps://en.wikipedia.org/wiki/Integrityhttps://en.wikipedia.org/wiki/Subjectivityhttps://en.wikipedia.org/wiki/Subjectivityhttps://en.wikipedia.org/wiki/Beliefshttps://en.wikipedia.org/wiki/Ethicshttps://en.wikipedia.org/wiki/Moralityhttps://en.wikipedia.org/wiki/Moralityhttps://en.wikipedia.org/wiki/Doctrinehttps://en.wikipedia.org/wiki/Ideologyhttps://en.wikipedia.org/wiki/Ideologyhttps://en.wikipedia.org/wiki/Norm_(sociology)https://en.wikipedia.org/wiki/Aestheticshttps://en.wikipedia.org/wiki/Aestheticshttps://en.wikipedia.org/wiki/Altruismhttps://en.wikipedia.org/wiki/Intrinsic_value_(ethics)https://en.wikipedia.org/wiki/Vicehttps://en.wikipedia.org/wiki/Virtuehttps://en.wikipedia.org/wiki/Anthropologyhttps://en.wikipedia.org/wiki/Behavioral_economicshttps://en.wikipedia.org/wiki/Business_ethicshttps://en.wikipedia.org/wiki/Business_ethicshttps://en.wikipedia.org/wiki/Corporate_governancehttps://en.wikipedia.org/wiki/Moral_philosophyhttps://en.wikipedia.org/wiki/Moral_philosophyhttps://en.wikipedia.org/wiki/Political_scienceshttps://en.wikipedia.org/wiki/Social_psychologyhttps://en.wikipedia.org/wiki/Sociologyhttps://en.wikipedia.org/wiki/Theologyhttps://en.wikipedia.org/wiki/Individualhttps://en.wikipedia.org/wiki/Value_(ethics)#Absolute_or_relativehttps://en.wikipedia.org/wiki/Value_systemhttps://en.wikipedia.org/wiki/Value_(ethics)https://en.wikipedia.org/wiki/Principle_valuehttps://en.wikipedia.org/wiki/Integrityhttps://en.wikipedia.org/wiki/Subjectivityhttps://en.wikipedia.org/wiki/Beliefshttps://en.wikipedia.org/wiki/Ethicshttps://en.wikipedia.org/wiki/Moralityhttps://en.wikipedia.org/wiki/Doctrinehttps://en.wikipedia.org/wiki/Ideologyhttps://en.wikipedia.org/wiki/Norm_(sociology)https://en.wikipedia.org/wiki/Aestheticshttps://en.wikipedia.org/wiki/Altruismhttps://en.wikipedia.org/wiki/Intrinsic_value_(ethics)https://en.wikipedia.org/wiki/Vicehttps://en.wikipedia.org/wiki/Virtuehttps://en.wikipedia.org/wiki/Anthropologyhttps://en.wikipedia.org/wiki/Behavioral_economicshttps://en.wikipedia.org/wiki/Business_ethicshttps://en.wikipedia.org/wiki/Corporate_governancehttps://en.wikipedia.org/wiki/Moral_philosophyhttps://en.wikipedia.org/wiki/Moral_philosophyhttps://en.wikipedia.org/wiki/Political_scienceshttps://en.wikipedia.org/wiki/Social_psychologyhttps://en.wikipedia.org/wiki/Sociologyhttps://en.wikipedia.org/wiki/Theology


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/alues can be defined as broad preferences concerning appropriate courses of action or

outcomes. 0s such, values reflect a persons sense of right and wrong or what EoughtE to be.

EAqual rights for allE, EA?cellence deserves admirationE, and E;eople should be treated with

respect and dignityE are representative of values. /alues tend to influence attitudes and behavior.

Characteristics)

/alues may be specific, such as honouring ones parents or owning a home or they may be more

general, such as health, love and democracy. $"ruth prevails%, $love thy neighbour as yourself,

$learning is good as ends itself are a few e?amples of general values. Individual achievement,

individual happiness and materialism are maBor values of modern industrial society.

/alue systems can be different from culture to culture. Hne may value aggressiveness and

deplores passivity, another the reverse, and a third gives little attention to this dimension

altogether, emphasising instead the virtue of sobriety over emotionality, which may be quite

unimportant in either of the other cultures. "his point has very aptly been e?plored and e?plained

by 1lorence :luchkhon 45>5! in her studies of five small communities tribes! of the 0merican

south


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0+1 In$ivi$ua! va!ues)

"hese are the values which are related with the development of human personality or individual

norms of recognition and protection of the human personality such as honesty, loyalty, veracity

and honour.

0-1 Co!!ective va!ues)

/alues connected with the solidarity of the community or collective norms of equality, Bustice,

solidarity and sociableness are known as collective values.

a!ues can a!so "e categorise$ rom the point o view their hierarchica! arrangement)

0+1 Intrinsic va!ues)

"hese are the values which are related with goals of life. "hey are sometimes known as ultimate

and transcendent values. "hey determine the schemata of human rights and duties and of human

virtues. In the hierarchy of values, they occupy the highest place and superior to all other values

of life.

0-1 Instrumenta! va!ues)

"hese values come after the intrinsic values in the scheme of gradation of values. "hese values

are means to achieve goals intrinsic values! of life. "hey are also known as incidental or

pro?imate values.

Importance an$ unctions o va!ues)

/alues are general principles to regulate our day


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Ke also stressed that values enable individuals to feel that they are part of something bigger than

themselves. =odem sociologist A. -hils 4563! also makes the same point and calls Fthe central

value system the main values of society! are seen as essential in creating conformity and order.

Indian sociologist .:. =ukerBee 45>5! writes7 $'y their nature, all human relations and

behaviour are imbedded in values.%

The main functions of values are as follows:

4. /alues play an important role in the integration and fulfillment of mans basic impulses and

desires in a stable and consistent manner appropriate for his living.

3. "hey are generic e?periences in social action made up of both individual and social responses

and attitudes.

8. "hey build up societies, integrate social relations.

>. "hey mould the ideal dimensions of personality and range and depth of culture.

2. "hey influence peoples behaviour and serve as criteria for evaluating the actions of others.

@. "hey have a great role to play in the conduct of social life.

6. "hey help in creating norms to guide day


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"hese institutions inculcate values in an individual and influence his life in taking decisions

of what is right or wrong 7 whom to be rewarded for good behaviour and whom to be punished

for bad behaviour .

3. ;ersonal 1actors 7 ;ersonal attributes such as ability, intelligence, education level and

other aspects also determine an individuals values. 1or e?ample, if one is intelligent. It

may result in faster understanding of values

8. -ituational 1actors 7 -ituations are unforeseen and an individual changes his values as the

situation demands. 1or A?ample, 0 person who faces the threat of loosing a Bob many

commit unethical acts to save his Bob.Developing /alue -ystem In 0n Hrganisation

0 value system is a protocol for behaviour that enhances trust9 coni$ence9 an$

commitment o mem"ers o the communit#, It goes "e#on$ the $omain o !ega!it#, Itis a"out $ecent an$ $esira"!e "ehaviour,

*owever9 this va!ue s#stem is ero$ing in the contemporar# "usiness, It can "e seen

rom the o!!owing o"servations )

+, Accounta"i!it# ) In$ian managers are !ess accounta"!e as compare$ to managers

o the west, In west9 managers are he!$ accounta"!e or whatever the# $o "ut in

in$ia9 the# are !ess accounta"!e even i the# are in a goo$ position,

-, Tren$ towar$s in$ivi$ua!ism ) There is a tren$ in$ivi$ua!ism an$ comparative!#

!ess sensitive an$ !ess socia!!# responsi"!e attitu$e o peop!e, Corruption 9

cheating an$ "ri"er# have eaten o s#stem, For E'amp!e9 contractors "ri"e

oicia!s an$ construct !owua!it# roa$s an$ "ri$ges,

3%


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CREDIT RATING AGENCIESMEANING Cre$it rating agenc# is a!so ca!!e$ rating service, It is a compan# that assigns

cre$it rating 9 which rate a $e"tors a"i!it# to pa# "ac% $e"t "# ma%ing time!#

interest pa#ments an$ the !i%e!ihoo$ o $eau!t , An agenc# ma# rate

cre$itworthiness o issuer o $e"t o"!igations9 o $e"t instruments an$ in some cases9

o the services o un$er!#ing $e"t9 "ut not o in$ivi$ua! consumers, A cre$it rating

aci!itate the tra$ing o securities on a secon$ar# mar%et, It eects the interest rate

that are securities pa#s out 9with higher rating !ea$ing to !ower interest rates,RO5E IN CAPITA5 MARETSCre$it rating agencies access the re!ative cre$it ris% o speciic $e"t securities are

structure$ inance instruments an$ "orrowing entities9 an$ in some cases the

cre$itworthiness o the governments an$ their securities, serving as inormation

interme$iaries9 CRAs theoretica!!# re$uce inormation costs9 increase the poo! o

potentia! "orrowers9 an$ promote !iui$ mar%ets, These unctions ma# increase the

supp!# o avai!a"!e ris% capita! in the mar%et an$ promote its economic growth ,

&ig Cre$it Rating Agencies ,+, Stan$ar$ 2 Poor-, Moo$#s

., Fitch Group

STANDARD 2 POORS

Stan$ar$ poors inancia! services is an American inancia! services

compan#, It is a $ivision o McGraw *i!! Financia! that pu"!ishes inancia!

research an$ ana!#sis stoc%s an$ "on$s, It was oun$e$ in +>4= "# *enr#

arnum poor, Its hea$uarters are new 7or% cit# 2 (S, The revenue o the

compan# was -,4+ "i!!ion us in -==:,e# Attri"utes O Stan$ar$ 2 PoorHs Cre$it Ratings Ran% or$ering o cre$itworthiness )Stan$ar$ 2 PoorHs cre$it ratings e'press

orwar$!oo%ing opinions a"out the cre$itworthiness o issuers an$ o"!igations

Primar# actor !i%e!ihoo$ o $eau!t) In our view9 !i%e!ihoo$ o $eau!t is the

centerpiece o cre$itworthiness, That means !i%e!ihoo$ o $eau!tencompassing

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"oth capacit# an$ wi!!ingness to pa#is the sing!e most important actor in our

assessment o the cre$itworthiness o an issuer or an o"!igation,

Secon$ar# actors ) Stan$ar$ 2 PoorHs cre$it ratings are orwar$!oo%ing, That is9 the# e'press opinions

a"out the uture, In$ee$9 the issue that the# a$$ress cre$it ua!it# is at its core

utureoriente$, Ratings at the !ower en$ o the rating sca!e re!ect our view as to the

rate$ entit#Hs vu!nera"i!it# to c#c!ica! !uctuations an$9 accor$ing!#9 genera!!#

a$$ress shorter time horions an$ ma# re!ect speciic economic orecasts an$

pro/ections, Converse!#9 ratings at the higher en$ o the rating sca!e genera!!#

a$$ress !onger time horions an$ are usua!!# !ess re!ective o orecasts or

pro/ections o what is !i%e!# to occur in the near term, Instea$9 the# re!ect greater

emphasis o our view as to what might occur in un!i%e!# uture scenarios,

*O6 S2P MANAGES POTENTIA5 CONF5ICTS OF

INTEREST A c!ear separation o unction "etween those who negotiate the "usiness terms or

rating assignment an$ the ana!#sts who con$uct the cre$it rating ana!#sis an$

provi$e the rating opinion,

Another saeguar$s is the committee process that !imits the in!uence an#

sing!e personcan have on S2P rating opinion, The ro!e o committee is to

review an$ assess the ana!#sts recommen$ationor a new rating as we!! as

to provi$e a$$itiona! perspectives an$ chec%s ,

PROCESS OF S2P RATINGS Contract ) The issuer reuests a rating an$ signs an engagement !etter,

Preeva!uation) S2P assem"!es a team o ana!#st to review pertinent inormation,

Management meeting) ana!#sts meet with management team to review an$

Ana!#sis) ana!#sts eva!uate inormation an$ propose the rating to rating committee,

Rating committee) the committee meets to review an$ $iscuss inc!u$ing the u!!

ana!#sis an$ ratingrationa!e9 an$ then vote on cre$it rating, Notiication) S2P ma# a!!ow an appea! on!# i the issuer can provi$e new an$

signiicant inormation to support a potentia!!# $eau!t rating conc!usion,

Pu"!ication) S2P t#pica!!# pu"!ish a press re!ease announcing the rating an$ posts ,

Ro!e an$ Function o Cre$it Rating AgenciesStan$ar$ 2 PoorHs cre$it ratings are "ase$ principa!!# on pu"!ic inormation a"out

an issuer an$ a$$itiona! inormation that ma# "e provi$e$ "# the issuer9 as we!! as

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other economic9 inancia! an$ in$ustr# inormation that rating ana!#sts $eem

re!evant an$ re!ia"!e, Stan$ar$ 2 PoorHs cre$it ratings necessari!# em"o$#

assessments o uture potentia! perormance, *owever9 since events occur that are

unoreseea"!e or simp!# un%nowa"!e9 Stan$ar$ 2 PoorHs regu!ar!# reviews its

ana!#ses, Once assigne$9 a cre$it rating is su"/ect to ongoing review9 or survei!!ance9

an$ cou!$ "e change$ at an# time "ase$ on new!# avai!a"!e inormation, Cre$it

ratings ma# a!so "e suspen$e$ or with$rawn "ecause o changes in the

comp!eteness9 avai!a"i!it# or re!ia"i!it# o inormation

MODE5S OF CORPORATEGOERNANCE+, ANG5O AMERICAN MODE5

-, GERMAN MODE5

INTROD(CTION TO ANG5O AMERICANThis is a!so %nown as unitar# "oar$ mo$e!9 in which a!! $irectors participate in a

sing!e "oar$ comprising "oth e'ecutive an$ none'ecutive $irectors in var#ing

proportions, This approach to governance ten$s to "e shareho!$eroriente$,

It is

a!so ca!!e$ the JAng!oKSa'on approach to corporate governance9 "eing the "asis o

corporate governance in America9 &ritain9 Cana$a9 Austra!ia an$ other

commonwea!th countries inc!u$ing In$ia,

FEAT(RES OF ANG5O AMERICAN Ownership is eua!!# $ivi$e$ "etween in$ivi$ua! an$ institutiona! shareho!$ers,

Directors are rare!# in$epen$ent o management,

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Run "# proessiona! managers who have neg!igi"!e ownership sta%e,

Most institutiona! investors are re!uctant activists

Disc!osure norms,

SEPARATION OF O6NERS*IP AND CONTRO5

-HAs and widely held publicly traded companies typically separate management an$

ownership.

"he professional managers and the shareholders have conflicts of interest.

"his raises the possibility that ownership and management may not be perfectly aligned

in their business and financial obBectives, the so called agency problem arises .

"he Goal of =anagement

Ma'imiation o shareho!$ers wea!th is the dominant goal of management in the0nglo


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-hareholder (ealth =a?imi#ation

In a -hareholder (ealth =a?imi#ation model -(=!, a firm should strive to ma?imi#e

the return to shareholders

=a? market capitali#ation P dividend payment!

0lternatively, the firm should minimi#e the level of risk to shareholders for a given rate

of return.

Good Corporate Governance

"he o"/ective o corporate governance is the optimi#ation over time of the returns to

shareholders.

"he board of directors of the corporation should focus their on $eve!oping an$

imp!ementing a strateg# that ensures corporate growth an$ improvement in the

va!ueof the corporations equity.

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Goo$ corporate governance practices shou!$) 0the so ca!!e$ OECD ru!e1

protect shareho!$ers rights,

ensure the euita"!e treatment o a!! shareho!$ers,

-takeholders should be invo!ve$ in corporate governance. )ocal government,

labor union, etc

Disc!osure an$ transparenc#is critical.

"he board of directors should be monitore$ and held accounta"!e

e# P!a#ers in the Ang!o(S Mo$e!,

;layers in the 0nglo


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GERMAN MODE5 OF CORPORATE GOERNANCE

"wo tier board model

*pper board supervises the e?ecutive board on behalf of stakeholders and its typically

social oriented.

-hareholder do not dictate the governance mechanism.

-hareholder elect 2N members of the supervisory board and rest is by labor unions,

ensuring they enBoy share in governance.

-upervisory board appoints and monitors the management board.

e# P!a#ers in the German Mo$e!

German "an%s, and to a lesser e?tent9 corporate shareho!$ers, are the key players in

the German corporate governance system. 'anks usually play a multi


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Share Ownership Pattern in the German Mo$e!

German banks and corporations are the dominant shareholders in Germany. In 455,

corporations held >4 percent of the German equity market, and institutional owners

primarily banks! held 36 percent. +either institutional agents, such as pension funds

three percent! or individual owners four percent! are significant in Germany. 1oreign

investors held 45 percent in 455, and their impact on the German corporate governance

system is increasing.

Composition o the Management &oar$

German corporations are governed by a supervisory board and a management board. "he

supervisory board appoints and dismisses the management board, approves maBor

management decisionsJ and advises the management board. "he supervisory board

usually meets once a month. "he management board is responsible for daily management

of the company. "he management board is composed solely of $insiders%, or e?ecutives.

"he supervisory board contains no $insiders%, it is composed of laborMemployee

representatives and shareholder representatives. "he numbers of members of the

4#


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supervisory board is set by law. In small corporations shareholders elect the entire

supervisory board. In medium


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Q Aquity 1inancing is important for apanese Corporations

Q Insiders and their affiliates are the maBor shareholders in most apanese corporations.

E7 P5A7ERS

"he apanese system of Corporate Governance is many


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8. =anagement and the

>. Government

Interaction among these players serves to link relationship rather balance power, as in the

case of 0nglo


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*ARS*AD ME*TA SCAM

Karshad -hantilal =ehta was born in a GuBarati ain family of modest means. Kis early

childhood was spent in =umbai where his father was a small


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=ehta gradually rose to become a stock broker on the 'ombay -tock A?change, who did very

well for himself. 0t his peak, he lived almost like a movie star in a 42, square feet house,

which had a swimming pool as well as a golf patch. Ke also had a taste for flashy cars, which

ultimately led to his downfall.

RISE OF ME*TA

"he year was 455. ears had gone by and the driving ambitions of a young man in the faceless

crowd had been realised. Karshad =ehta was making waves in the stock market. Ke had been

buying shares heavily since the beginning of 455. "he shares which attracted attention were

those of 0ssociated Cement Company 0CC!,% write the authors. "he price of 0CC was bid up

to s 4,. 1or those who asked, =ehta had the replacement cost theory as an e?planation.

"he theory basically argues that old companies should be valued on the basis of the amount of

money which would be required to create another such company.

=ehta was the darling of the business media and earned the sobriquet of the F'ig 'ull, who was

said to have started the bull run. 'ut, where was =ehta getting his endless supply of money

fromS +obody had a clue.

FRA(D COMMITTED

"he crucial mechanism through which the scam was effected was the ready forward 1! deal.

"he 1 is in essence a secured short


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It was this ready forward deal that Karshad =ehta and his cronies used with great success to

channel money from the banking system.

0 typical ready forward deal involved two banks brought together by a broker in lieu of a

commission. "he broker handles neither the cash nor the securities, though that wasnt the case

in the lead


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Kaving figured this out, =etha needed banks, which could issue fake 's, or 's not backed by

any government securities. "wo small and little known banks < the 'ank of :arad 'H:! and the

=etorpolitan Co


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ME*TA DIED

=r =ehta was under Budicial custody in the "hane prison after a special court remanded him and

his two brothers, =r 0shwin =ehta and =r -udhir =ehta, in a fresh case of misappropriation.

0ccording to sources, =r =ehta complained of chest pain late night and was admitted to the

civil hospital where he breathed his last around 43.> a.man< 1. 2''2?

5. Corporate Governance FILE

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Transcript of 5. Corporate Governance FILE