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BUSINESS ETHICS IN CORPORATE GOVERANCE
Group No : 10
•VIRAL PANDYA (roll no : 36)•ATEET CHATURVEDI (roll no : 10)•ADITYA KOTAWALE (roll no : 25)•KISHORE VEDANTAM (roll no: 58)
Corporate Governance Parties• Shareholders – those that own the company
• Directors – Guardians of the Company’s assets for the Shareholders
• Managers who use the Company’s assets
• Primarily concerned with public listed companies i.e. those listed on a Stock Exchange
Four Pillars of Corporate Governance
• Accountability
• Fairness
• Transparency
• Independence
Accountability
• Ensure that management is accountable to the Board
• Ensure that the Board is accountable to shareholders
Fairness• Protect Shareholders rights
• Treat all shareholders including minorities, equitably
• Provide effective redress for violations
Transparency
Ensure timely, accurate disclosure on all material matters, including the financial situation,
performance, ownership and corporate governance
Independence• Procedures and structures are in place so as to
minimise, or avoid completely conflicts of interest
• Independent Directors and Advisers i.e. free from the influence of others
Business Ethics in Corporate Governance
Elements of Corporate Governance
• Good Board practices
• Control Environment
• Transparent disclosure
• Well-defined shareholder rights
• Board commitment
Good Board Practices• Clearly defined roles and authorities
• Duties and responsibilities of Directors understood
• Board is well structured
• Appropriate composition and mix of skills
Good Board procedures• Appropriate Board procedures
• Director Remuneration in line with best practice
• Board self-evaluation and training conducted
Control Environment• Internal control procedures
• Risk management framework present
• Disaster recovery systems in place
• Media management techniques in use
Control Environment• Business continuity procedures in place
• Independent external auditor conducts audits
• Independent audit committee established
Control Environment• Internal Audit Function
• Management Information systems established
• Compliance Function established
Transparent Disclosure• Financial Information disclosed
• Non-Financial Information disclosed
• Financials prepared according to International Financial Reporting Standards (IFRS)
Transparent Disclosure• Companies Registry filings up to date
• High-Quality annual report published
• Web-based disclosure
Well-Defined Shareholder Rights
• Minority shareholder rights formalised
• Well-organised shareholder meetings conducted
• Policy on related party transactions
Well-Defined Shareholder Rights
• Policy on extraordinary transactions
• Clearly defined and explicit dividend policy
Board Commitment• The Board discusses corporate governance issues
and has created a corporate governance committee• The company has a corporate governance champion• A corporate governance improvement plan has been
created• Appropriate resources are committed to corporate
governance initiatives
Board Commitment• Policies and procedures have been formalised and
distributed to relevant staff• A corporate governance code has been developed• A code of ethics has been developed• The company is recognised as a corporate
governance leader
Other Entities• Corporate Governance applies to all types of
organisations not just companies in the private sector but also in the not for profit and public sectors
• Examples are NGOs, schools, hospitals, pension funds, state-owned enterprises
Why Corporate Governance?
• Better access to external finance• Lower costs of capital – interest rates on loans• Improved company performance – sustainability• Higher firm valuation and share performance • Reduced risk of corporate crisis and scandals
ABSENCES OF CG CAUSES SERIOUS MALPRACTICES
WAKF BOARD LAND SCAM – 2012 – 1.5 – 2 Lakh Crore (3rd Biggest Scam in India) In March of 2012, Anwar Maniapddy, the chairman of Karnataka State Minorities Commission submitted a sensational report which alleged 27,000 acres of land, which was controlled by Karnataka Wakf Board had been allocated illegally or misappropriated. The value of land which was misappropriated was in tune of 1.5 to 2 lakh crore rupees. The land managed by Wakf board, a Muslim charitable trust, is typically donated to under-privileged and poor people of Muslim community. However, the report alleged that nearly 50 percent of the land owned by Wakf board was misappropriated by Politicians and Board members in conjunction with real estate mafia at fraction of actual land cost.
BIRTH OF CORPORATE FORENSIC INDUSTRY
The big four—Ernst & Young, KPMG, PriceWaterhouse Coopers and Deloitte — Alvarez and Marsal and FTI Consulting are among those engaged in the sector.
Corporate investigations or forensics include processes such as background checks on company executives and promoters besides looking into fraud, corruption and other corporate governance issues.
The corporate forensics business in India is estimated at Rs 400 to Rs 500 crore and could grow to about Rs 800 crore in the next few years, analysts said.
Best Governed Companies in India
CONCLUSION• Failure in Corporate Governance is a real threat to the
future of every corporation.• With effective CG, Companies can gain Competitive
advantage and generates positive reaction in the market.
• Companies should adopt Environmental, Whistle blowing & Ethical training programmes.
Choose your path
THANK YOU