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CORPORATE CORPORATE GOVERNANCEGOVERNANCE

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REFERENCES-REFERENCES-

• STUDY – MATERIALSTUDY – MATERIAL

• CORPORATE- GOVERNANCE= BY CORPORATE- GOVERNANCE= BY DR.S.SINGHDR.S.SINGH

• INTERNET INTERNET [http://en.wikipedia.org/wiki/corporate_govr.][http://en.wikipedia.org/wiki/corporate_govr.]

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Contents-Contents-• 1.DEFINITION.1.DEFINITION.

• 2.HISTORY.2.HISTORY.

• 3.PRINCIPLES.3.PRINCIPLES.

• 4.CORPORATE GOVERNANCE AT ORACLE 4.CORPORATE GOVERNANCE AT ORACLE CORPORATION.CORPORATION.

• 5.INTERNAL AND EXTERNAL CORPORATE 5.INTERNAL AND EXTERNAL CORPORATE GOVERNANCE CONTROLS.GOVERNANCE CONTROLS.

• 6.SYSTEMIC PROBLEMS OF CORPORATE 6.SYSTEMIC PROBLEMS OF CORPORATE GOVERNANCE.GOVERNANCE.

• 7.CORPORATE MODELS.7.CORPORATE MODELS.

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DEFINITION-DEFINITION-• ““Corporate governance is the set of processes, Corporate governance is the set of processes,

customs, policies and laws affecting the way in which customs, policies and laws affecting the way in which a corporation is directed, administered or controlled” a corporation is directed, administered or controlled” ((http:\en.wikipedia.org\wiki\corporategovernance)http:\en.wikipedia.org\wiki\corporategovernance)

• It also includes the relationship among the It also includes the relationship among the stakeholders and the goals for which the corporation stakeholders and the goals for which the corporation is governed.is governed.

• The corporate governance structure specifies the The corporate governance structure specifies the rules and procedure for making decision on corporate rules and procedure for making decision on corporate affairs.affairs.

• it also provide the structure throughit also provide the structure through which the which the company objectives are set.company objectives are set.

• It is used to monitor whether outcomes are in It is used to monitor whether outcomes are in accordance with plans or not. accordance with plans or not. [STUDY-MATERIAL][STUDY-MATERIAL]

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HISTORY-HISTORY-• In 19In 19thth century the need for a better corporate governance century the need for a better corporate governance

was felt when- was felt when- • Few giant corporation in u.s. collapsed Few giant corporation in u.s. collapsed

– e.g. ENRON, WORLD COM, ADELPHIA.e.g. ENRON, WORLD COM, ADELPHIA.– Few companies of U.K. also witnessed several cases of Few companies of U.K. also witnessed several cases of

corporate corruption and collapse.corporate corruption and collapse. It led to setting of CADBURY(1996), GREEBURY and It led to setting of CADBURY(1996), GREEBURY and

HAMPEL(1997) committeeHAMPEL(1997) committee. [INTERNET]. [INTERNET] INDIAN- SCENARIO INDIAN- SCENARIO [P.NO. 183-DR.S.SINGH][P.NO. 183-DR.S.SINGH]

Initial thrust for better corporate governance came in Initial thrust for better corporate governance came in INDIA mainly due to-INDIA mainly due to-

Due to 1992 stock market scam .Due to 1992 stock market scam . Onset of international competition resulting from the Onset of international competition resulting from the

policy of liberalisation of economy in 1991policy of liberalisation of economy in 1991

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• The confederation of INDIAN industries was the first The confederation of INDIAN industries was the first to appoint a committee under chairmanship of to appoint a committee under chairmanship of Mr.rahul bajaj in 1998.Mr.rahul bajaj in 1998.

• It was followed by4 national level committeeIt was followed by4 national level committee

• Kumar mangalam birla committee in 1999.Kumar mangalam birla committee in 1999.

• N.R. Narayana murty committeein 2003N.R. Narayana murty committeein 2003

• Gangully committee report in 2002.Gangully committee report in 2002.

• 44thth committee appointed by govt. of INDIA known committee appointed by govt. of INDIA known

as report of naresh chandraas report of naresh chandra. .

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PRINCIPLES-PRINCIPLES-• Key elements of good corporate governance Key elements of good corporate governance

principles include honesty, trust and integrity, principles include honesty, trust and integrity, openness, responsibility and openness, responsibility and accountability,mutual respect to the accountability,mutual respect to the organisationorganisation

• Commonly accepted principles of corporate Commonly accepted principles of corporate governance includes-governance includes-

• TRANSPARENCY BOARD-effectivenessTRANSPARENCY BOARD-effectiveness

• SHAREHOLDERS rightSHAREHOLDERS right

• • [P.NO.180- DR.S.SINGH][P.NO.180- DR.S.SINGH]

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• Transparency-Transparency--disclosure of data.-disclosure of data.

-disclosure of transaction-disclosure of transaction.. Shareholders rightShareholders right--right and equitable treatment of shareholders.right and equitable treatment of shareholders.

-right to vote.-right to vote.

Board effectivenessBoard effectiveness• Role and effectiveness of board.Role and effectiveness of board.

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CORPORATE GOVERNANCE AT ORACLE CORPORATE GOVERNANCE AT ORACLE CORPRATIONCORPRATION

• As part of these practices, the board has adopted following As part of these practices, the board has adopted following corporate governance guidelines which align the interest of corporate governance guidelines which align the interest of directors and management with those of oracle corporation directors and management with those of oracle corporation stockholders-stockholders-

• The board of oracle corporation has through out its history The board of oracle corporation has through out its history developed corporate governance practices to fulfill its developed corporate governance practices to fulfill its responsibility towards oracle corporation stockholders.responsibility towards oracle corporation stockholders.

Oracle corporationOracle corporation CORPORATE GOVERNANCECORPORATE GOVERNANCE guidelines –guidelines –1.1.ddirectors qualification. irectors qualification. 66.performance-evaluation..performance-evaluation.22 Directors responsibility.Directors responsibility.33.Board committees..Board committees.44.Director access to officers and employees..Director access to officers and employees.55.CEO evaluation..CEO evaluation.Board with the help of nomination and governance committee Board with the help of nomination and governance committee

can review these guidelinescan review these guidelines[P.NO.180 -DR.S.SINGH][P.NO.180 -DR.S.SINGH]

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Internal and external corporate Internal and external corporate governance controls-governance controls-• Internal corporate governance controls-Internal corporate governance controls---internal corporate governance controls monitor internal corporate governance controls monitor

activities and take corrective action to accomplishactivities and take corrective action to accomplishorganisational goals.examples includes-organisational goals.examples includes-##Monitoring by board of directors-Monitoring by board of directors-#remuneration-#remuneration-##disclosuredisclosure-the annual report should contain the -the annual report should contain the

following-following--name of chairman, deputy chairman, CEO & non -name of chairman, deputy chairman, CEO & non

executive directors.executive directors.-the audit and remuneration committee members.-the audit and remuneration committee members.-the no. of meeting held by the board &no. of directors -the no. of meeting held by the board &no. of directors

attend.attend.-how board and committee performation evaluaton -how board and committee performation evaluaton

has been conductedhas been conducted

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External corporate governance External corporate governance controls-controls-

#govt. regulations.#govt. regulations.

#media pressure.#media pressure.

#takeovers.#takeovers.

#competition.#competition.

[INTERNET][INTERNET]

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SYSTEMIC PROBLEMS OF SYSTEMIC PROBLEMS OF CORPORATE GOVERNANCECORPORATE GOVERNANCE#SUPPLY OF ACCOUNTING #SUPPLY OF ACCOUNTING

INFORMATION.INFORMATION.

#DEMAND FOR INFORMATION.#DEMAND FOR INFORMATION.

#MONITORING COSTS.#MONITORING COSTS.

[INTERNET][INTERNET]

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• Generally only two types of corporate models are discussed-Generally only two types of corporate models are discussed-

1.Anglo American model-1.Anglo American model-2.Non Anglo American model- 2.Non Anglo American model-

[INTERNET][INTERNET]

--e.g. Reliance industries ltd. e.g. Reliance industries ltd. % holding% holding

1.1 promoters holding 1.1 promoters holding 46.6846.68 1.2 institutional investors 1.2 institutional investors 28.35 28.35 1.3 Indian public 1.3 Indian public 16.5616.56

1.4 others (NRI,OCB,DGDR) 1.4 others (NRI,OCB,DGDR) 8.40 8.40e.g. WIPROe.g. WIPRO 1.1 pr0moters 1.1 pr0moters 83.9583.95 1.2 institutional investors 1.2 institutional investors 3.773.77 1.3 INDIAN public 1.3 INDIAN public 7.037.03 1.4 others (NRI,OCB,DGDR) 1.4 others (NRI,OCB,DGDR) 5.255.25 [P.NO. 85 DR.S. SINGH][P.NO. 85 DR.S. SINGH]

CORPORATE MODELSCORPORATE MODELS

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•Thank- youThank- you