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    CORPORATEGOVERNANCE

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    Corporate Governance

    Corporate Governance is the application ofbest management practices, compliance of lawin true letter and spirit and adherence toethical standards for eective management

    and distribution of wealth and discharge ofsocial responsibility for sustainabledevelopment of all stakeholders.

    Conduct of business in accordance with

    shareholders desires (maximising wealth) whileconrming to the basic rules of the societyembodied in the !aw and !ocal Customs

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    Corporate Governance"elationships among various participants

    in determining the direction andperformance of a corporation.

    #ective management of relationshipsamong

    $hareholders

    %anagers

    &oard of directors

    employees Customers

    Creditors

    $uppliers

    community

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    Why CorporateGovernance?&etter access to external nance!ower costs of capital ' interest rates on

    loans

    mproved company performance 'sustainability

    igher rm valuation and shareperformance

    "educed risk of corporate crisis andscandals

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    Principles of CorporateGovernanceSustainable evelop!ent of all sta"e

    holers# to ensure growth of all individualsassociated with or eected by theenterprise on sustainable basis

    E$ective !ana%e!ent an istributionof &ealth ' to ensue that enterprisecreates maximum wealth and *udiciouslyuses the wealth so created for providing

    maximum benets to all stake holders andenhancing its wealth creation capabilities tomaintain sustainability

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    'ischar%e of social responsibility# toensure that enterprise is acceptable to the

    society in which it is functioningApplication of best !ana%e!ent

    practices# to ensure excellence in functioningof enterprise and optimum creation of wealthon sustainable basis

    Co!pliance of la& in letter ( spirit# toensure value enhancement for all stakeholdersguaranteed by the law for maintaining socio+economic balance

    Aherence to ethical stanars# to ensureintegrity, transparency, independence andaccountability in dealings with all stakeholders

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    Transparency

    #nsure timely, accurate disclosure on allmaterial matters, including the nancial

    situation, performance, ownership andcorporate governance

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    )nepenencerocedures and structures are in place

    so as to minimise, or avoid completelycon-icts of interest

    ndependent irectors and /dvisers i.e.free from the in-uence of others

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    Ele!ents of CorporateGovernanceGood &oard practices

    Control #nvironment

    0ransparent disclosure

    1ell+dened shareholder rights

    &oard commitment

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    Goo *oar PracticesClearly dened roles and authorities

    uties and responsibilities of irectors

    understood

    &oard is well structured

    /ppropriate composition and mix ofskills

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    Goo *oar proceures/ppropriate &oard procedures

    irector "emuneration in line with best

    practice

    &oard self+evaluation and trainingconducted

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    Control Environ!entnternal control procedures

    "isk management framework present

    isaster recovery systems in place

    %edia management techni2ues in use

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    Control Environ!ent

    &usiness continuity procedures in place

    ndependent external auditor conducts

    audits

    ndependent audit committeeestablished

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    Control Environ!ent

    nternal /udit 3unction

    %anagement nformation systems

    established

    Compliance 3unction established

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    Transparent 'isclosure

    3inancial nformation disclosed

    4on+3inancial nformation disclosed

    3inancials prepared according tonternational 3inancial "eporting$tandards (3"$)

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    Corporate %overnance in )nia

    0he ndian corporate scenario was more or lessstagnant till the early 56s.

    0he position and goals of the ndian corporate sectorhas changed a lot after the liberalisation of 56s.

    ndia7s economic reform programme made a steadyprogress in 8559.

    ndia with its :6 million shareholders, is one of thelargest emerging markets in terms of the marketcapitali;ation.

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    Conclusion/s ndian companies compete globally for access to

    capital markets, many are nding that the ability tobenchmark against world+class organi;ations isessential.

    3or a long time, ndia was a managed, protectedeconomy with the corporate sector operating in aninsular fashion.

    &ut as restrictions have eased, ndian corporationsare emerging on the world stage and discovering thatthe old ways of doing business are no longersu

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    Than" +ou