Powerpoint Group1

7/29/2019 Powerpoint Group1

1/41

The Corporation andCorporate Governance


2/41

- is an artificial being created by operation of law, having theright of succession and the powers, attributes and propertiesexpressly authorized by law or incident to its existence.


3/41

A stock corporation is a for-profit corporation which hasshareholders (stockholders), each of whom receives a portion ofthe ownership of the corporation through shares of stock. Theseshares may receive a return on their investment in the form ofdividends. Shares are used for voting on matters of corporatepolicy or to elect directors, at the corporation's annual meeting and

at other meetings of the corporation.

A non-stock corporation can be formed for charitable, religious,educational, professional, cultural, fraternal, literary, scientific,social, civic service, or similar purposes, such as trade, industry,

agricultural and like chambers, or any combination thereof(Section 88, Corporation Code).


4/41

Survival a short term objective, probably for small business juststarting out, or when a new firm enters the market or at a time of

crisis. Profit maximization try to make the most profit possible mostlike to be the aim of the owners and shareholders.

Profit satisfying try to make enough profit to keep the ownerscomfortable probably the aim of smaller businesses whose ownersdo not want to work longer hours.

Sales growth where the business tries to make as many sales as

possible. This may be because the managers believe that the survivalof the business depends on being large. Large businesses can alsobenefit from economies of scale.


5/41

- owner of one or more shares of stock in a

corporation

- owner of one or more shares or units in aMutual Fund


6/41

- Owner of a bond ( bondholders may be individuals or

institutions such as corporations, banks, insurancecompanies, or mutual funds).


7/41

- One serving as an officer or owner of a bank.


8/41

- Member of the board of directors of a corporation


9/41

- A conflict of interest (COI) occurs when an individual or

organization is involved in multiple interests, one ofwhich could possibly corrupt the motivation for an actin the other.


10/41

Self-dealing

Outside employment Family interests Gifts from friends who also do business Pump and dump


11/41

Agency theory is developed around the concept ofcontractual relationships between two groups withconflicting objectives


12/41


13/41


14/41

a harmony between the actions of individuals toachieve personal goals to help the achievement oforganizational goals.

present when individuals, departments and divisionsfocus their efforts on meeting organizational goals

is achieved when individuals in the organization striveor are induced to strive towards the company goals

ensures that the action of manager taken in their bestinterest is also in the best interest of the organization


15/41

Organizational Goals

Profitability Productivity

Effectiveness and efficiency Personal Goals

Career Advancements Recognition

Status

Job Satisfaction

Other kind of Social and Psychological FactorsRelating to the Employees.


16/41

Ensures frictionless working. Ensures achievement of organizations goal/strategic

objective Ensures coordination & motivation of all concerned

Ensures consistency in the working of all concerned. Gives fair chance to its employees to achieve their

personal goals. Enhances the loyalty towards the company. Satisfies prime requirement of Management Control

System (MCS)


17/41

Informal Factors

External factors- work ethic and appropriate

industry-specific norms. Internal factors - culture, management style,

informal relationships within the organizationand perception and communication.


18/41

Formal Factors

Management Control System the process of

evaluating, monitoring and controlling thevarious sub-units of the organization so thatthere is effective and efficient allocation andutilization of resources in achieving thepredetermined goals

Rules


19/41


20/41

Attitude- Positive attitude bestows positive results onthe entire organization.

Motivation- can be defined as to make someone want

to achieve something or to make someone willing towork hard in order to do it.

Perception- a psychological process which lets oneinterpret the sensory stimulation into meaningful

information about the environment Good Work Ethic


21/41

Participating in formulating strategy of the company; Oversight of management; Independent stand; Protecting the interests of all shareholders; Organize an examination and verification committee or

other committees.


22/41

Providing corporate administration services tocorporate clients;

Liaising with solicitors, clients, and regulatory agenciesglobally;

Ensuring corporate client compliance with globalstatutory requirements;

Providing secretarial services as required.


23/41

Management Buy-out


24/41

- is the opposite of a buy out in that a managementteam attempts to take control of assets that they do notalready manage. The difference to a management buy-outis in the position of the purchaser: in the case of a buy-out, they are already working for the company. In thecase of a buy-in, however, the manager or managementteam is from another source.


25/41

Non-Core Divestments and EfficiencyImprovements

Management Incentivisation

Insolvency

SuccessionBundled Businesses Aspiration Divergence


26/41

Employee Share Scheme provides employees with theopportunity to acquire shares in the company, thus enablingthem to participate in the companys prosperity and

consequently such opportunity is an incentive for theemployees to contribute further to the success of the Company

Employee share schemes have the potential to motivate staff byproviding long term tax efficient incentives. In some cases existing

shareholders may not want to give them actual shares in the company orthey may not want them to leave still owning shares in the company soflexibility is crucial.


27/41

- Executive Share Schemes is an arrangement whereby certaindirectors and employees are given the opportunity to purchase stockin the company at a fixed price at a future date.

Executive share schemes are supported as a method of improvingcompany performance through:

Motivating and retaining key employees;

Attracting quality management; andProviding performance incentives which allow executives to share therewards of the success of the company.


28/41

Ethics is a science of the morality of human conduct.Human conduct is free, knowing, deliberate humanactivity.

Business ethics - Business ethics (also known asCorporate ethics) is a form of applied ethics orprofessional ethics that examines ethical principles and

moral or ethical problems that arise in a businessenvironment.


29/41

1. Recruit and Hire Well

2. Educate Staff about What's at Risk3. Be Transparent about Your Finances4. Speak Truth to Authority5. Include Ethics in Each Employees Orientation


30/41


31/41

- The chief financial officer (CFO) is a corporateofficer primarily responsible for managing thefinancial risks of the corporation. This officer isalso responsible for financial planning andrecord-keeping, as well as financial reporting to

higher management.


32/41

The financial statement, prepared by the managementof company, present fairly its states of affairs, theresults of its operation, cash flows and change inequities.

Proper books of accounts of the company have beenmaintained. Appropriate accounting policies have been consistently

applied in preparation in financial statements andaccounting estimates are based on reasonable and

prudent judgment. International accounting standards have been followed

in preparation of financial statements and anydeparture there from has been adequately disclosed.


33/41

The system of internal control is sound in design andhas been effectively implemented and monitored.

There are no significant doubts upon the companiesability to continue as going concern.

There has been no material departure from the bestpractice of corporate governance as detailed in thelisting regulations.


34/41

An audit committee is a subcommittee of acorporations board of directors that selects the firmsexternal auditors.

The committee is also responsible for reviewing itsown companys business activities to identifyinefficiencies, reduce costs, and otherwise achieveorganizational objectives.


35/41

Monitor the integrity of the companys financialreporting process and system of internal controlsregarding finance and accounting matters.

Appoint the companys independent auditors engagedto prepare audit reports or to perform other audit,

review or attest services related to the companysfinancial statements and reports, and monitor theirindependence and oversee their performance.

Resolve any disagreement between management andthe independent auditors, management, and the Board

of Directors. Review the companys practices and policies withrespect to the identification, evaluation andmanagement of material risks related to its financialreporting.


36/41

Internal auditors are the professionals with an in-depth

understanding of the business culture, system, andprocesses who perform the internal audit activity.


37/41

The internal audit activity provides assurance thatinternal controls in place are adequate to mitigate therisks, governance processes are effective and efficient,and organizational goals and objectives are met.


38/41

An external auditor is an audit professional whoperforms an audit on the financial statements of acompany, government, individual, or any other legalentity or organization, and who is independent of theentity being audited.

The primary role of external auditor is to express anopinion on whether an entitys financial statements arefree of material misstatements


39/41

The internal auditors are part of the organization. Their objectives are determined by professional

standards, the board, and management. Their primary clients are management and board.

External auditors are not part of the organization, but areengaged by it.

Their objectives are set primarily by statute and their

primary client-the board of directors.


40/41

discuss common interest; benefit from their complimentary skills, areas of

expertise, and perspective; gain understanding of each others scope of work and

methods; discuss audit coverage and scheduling to minimize

redundancies; provide access to reports, programs and working

papers; and jointly assess areas of risks.


41/41

Powerpoint Group1

Documents

Transcript of Powerpoint Group1