Corporate Governance

AgendaAgenda

Definition & MeaningDefinition & Meaning ReportingReporting BoardBoard CEOCEO Senior ExecutivesSenior Executives

Definition"Corporate governance involves a set of relationships

between… A company’s management, Its board, Its shareholders & other stakeholders.

Corporate governance also provides, The structure through which the objectives of the

company are set, & the means of attaining those objectives and

monitoring performance are determined."

Meaning

It is a set of processes, customs, policies, laws, and institution affecting the way a company is directed, administered or controlled.

It is Relationships among the sakeholders.

The principal stakeholders: Shareholders, Management, and the Board of Directors.

Other stakeholders: Employees, Customers, Creditors, Suppliers, Regulators, and the Community at large.

multi-faceted subject.

ReportingReportingReportingReporting

According to Hierarchy…According to Hierarchy…

EmployeesEmployeesManagerManagerCEOCEOBoardBoardStakeholdersStakeholders

Objectives of ReportingTransparencyBudgeting IntegrityOperating PerformanceStewardshipSystems and Controls

Board Of directorsBoard Of directors

The Board of a Company providesThe Board of a Company provides Leadership and strategic guidance, Leadership and strategic guidance, Objective judgment independence of the management to Objective judgment independence of the management to

the Company, the Company, & exercises control over the Company.& exercises control over the Company.

The Board must fulfill its legal requirements & also The Board must fulfill its legal requirements & also must be aware of its responsibilities.must be aware of its responsibilities.

An effective corporate governance system is one, which An effective corporate governance system is one, which allows the Board to perform these dual functions efficiently.allows the Board to perform these dual functions efficiently.

Size of the BoardSize of the Board

Optimum size of the Board (10-12)Optimum size of the Board (10-12)

Bigger boards would be less effective as Bigger boards would be less effective as there will be a problem of coordination.there will be a problem of coordination.

Functions of the Board of Functions of the Board of DirectorsDirectors It directs the Company by formulating and It directs the Company by formulating and

reviewing the Company’s policies.reviewing the Company’s policies. It controls the Company and its management It controls the Company and its management

by laying down the code of conduct.by laying down the code of conduct. They are accountable to the shareholders for They are accountable to the shareholders for

creating, protecting and enhancing wealth creating, protecting and enhancing wealth and resources of the Company.and resources of the Company.

They are not involved in day to day They are not involved in day to day management of the Company.management of the Company.

Composition of the Board of Composition of the Board of DirectorsDirectors

Executive directors are involved in the day to day Executive directors are involved in the day to day management of the Companiesmanagement of the Companies

Non executive directors bring external and wider Non executive directors bring external and wider perspective and independence to the decision perspective and independence to the decision making.making.

Non executive directors may be independent or non Non executive directors may be independent or non - independent.- independent.

Chairman of the BoardChairman of the Board

The role of the Chairman is to ensure that the The role of the Chairman is to ensure that the board meetings are conducted in an effective board meetings are conducted in an effective manner.manner.

The Chairman’s role should in principle be The Chairman’s role should in principle be different from that of the Chief Executive.different from that of the Chief Executive.

Board proceduresBoard procedures

The Board meetings should be held at least 4 times in a year The Board meetings should be held at least 4 times in a year with a maximum time gap of 4 months between any two with a maximum time gap of 4 months between any two meetings.meetings.

A director should not be a member in more than 10 A director should not be a member in more than 10 committees or act as a Chairman of more than 5 committees committees or act as a Chairman of more than 5 committees across all companies in which he is a director.across all companies in which he is a director.

Every director must inform the Company about the Committee Every director must inform the Company about the Committee positions he occupies in other Companies and notify changes positions he occupies in other Companies and notify changes as and when they take place.as and when they take place.

The Chief Executive Officer

CEOs can provide a stimulating platform to non-executive directors by scheduling regular meetings for them.

CEOs should gain the trust and confidence of all stakeholders by presenting the balance sheets, & particularly the earnings and profit figures.

It is the responsibility of CEOs to take adequate measures to ensure that non-executive directors are independent.

…Continued

They carry out an audit on non-executive directors’ performance as well as that of the board.

CEOs may raise awareness amongst the board regarding conflicts of interest, sponsorships, etc…

Senior Executives

“Senior executives” consists generally a team of individuals at the highest level of organizational management who have the day-to-day responsibilities of managing a company or corporation.

Who are they?

They hold specific executive powers conferred onto them with and by authority of the board of directors and/or the shareholders.

There are most often higher levels of responsibility, such as a board of directors and those who own the company shareholders.

They are sometimes referred to, within corporations, as executive management, top management, upper management, higher management, or simply seniors.

Skills Required by Senior Executives

Basic Management and Leadership Planning Organizing Leading Coordinating activities /Resources

Role of Senior Executives

The role of the Senior Executive is to design, develop and implement strategic plans for their organization in a cost-effective and time-efficient manner.

The Executives are also responsible for the day-to-day operation of the organization, including managing committees and staff and developing business plans in collaboration with the board for the future of the organization.

…Conitued

The Executive Director is accountable to the President of the Board and reports to the board on a regular basis - quarterly, semiannually, or annually

As the title suggests, the Executive Director needs to be informed of everything that goes on in the organization

Created By-

Aditya Agarwal

ThanK YoU…