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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