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INTRODUCTIONINTRODUCTION

Corporate governance is the set of processes, customs, policies, laws, andinstitutions affecting the way a corporation(or company) is directed, administered orcontrolled.

The principal stakeholders are theshareholders, the board of directors,employees, customers, creditors, suppliers,and the community at large.

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H ISTORY H ISTORY In the 19th century, state corporation laws

enhanced the rights of corporate boards to governwithout unanimous consent of shareholders inexchange for statutory benefits like appraisal rights, tomake corporate governance more efficient in U.S.

The confederation of INDIAN industries was thefirst to appoint a committee under chairmanship of Mr.Rahul Bajaj in 1998.It was followed by 4 national level committee.

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DEFINITIONDEFINITION

Corporate governance is the set of

processes, customs, policies and laws affectingthe way in which a corporation is directed,administered or controlled

Corporate governance is a multi-facetedsubject. A n important theme of corporategovernance is to ensure the accountability of certain individuals in an organization.

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PA RTIES TO COR P OR A TEPA RTIES TO COR P OR A TE

GOVERN A NCEGOVERN A NCE

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P RINCI PL ESP RINCI PL ES

Key elements of good corporategovernance principles include honesty, trust andintegrity, openness, performance orientation,

responsibility and accountability, mutual respect,and commitment to the organization.

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COR P OR A TE GOVERN A NCECOR P OR A TE GOVERN A NCE

INC L UDE:INC L UDE:y Rights and equitable treatment of shareholders:

y Interests of other stakeholders:

y Role and responsibilities of the board:

y Integrity and ethical behavior:

y D isclosure and transparency:

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M EC HA NIS M S A NDM EC HA NIS M S A ND

CONTRO L SCONTRO L S

1. IN TERNAL CORPORATE G OVERNAN CE CON TROLS.

2. EXTERNAL

CORPORA

TEG

OVERNAN

CE CO

NTRO

LS.

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INTERN AL COR P OR A TEINTERN AL COR P OR A TE

GOVERN A NCE CONTRO L SGOVERN A NCE CONTRO L S

y Monitoring by the board of directorsy Internal control procedures and internal auditorsy Remunerationy Balance of power

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EXTERN AL COR P OR A TEEXTERN AL COR P OR A TE

GOVERN A NCE CONTRO L SGOVERN A NCE CONTRO L S

y Competitiony D ebt covenantsy D emand for and assessment of performance

information (especially financial statements)y G overnment regulationsy Managerial labour markety

Media pressurey Takeovers

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RO L E OF T H ERO L E OF T H E

A CCOUNT A NT A CCOUNT A NT

Financial reporting is a crucial elementnecessary for the corporate governancesystem to function effectively. A ccountantsand auditors are the primary providers of information to capital market participants.

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