Smoking is injurious to healthSmoking is injurious to health

Drinking is injurious to health Drinking is injurious to health and wealthand wealth

AARKEY CREATIVE WORKS AARKEY CREATIVE WORKS PRESENTSPRESENTS

VASISTA ARTSVASISTA ARTS

Corporate GovernanceCorporate Governance

BYBYRAAAMA KRISHNA. ARAAAMA KRISHNA. A

Why Corporate Governance?Why Corporate Governance?

Better access to external financeBetter access to external finance Lower costs of capital – interest rates on Lower costs of capital – interest rates on

loansloans Improved company performance – Improved company performance –

sustainabilitysustainability Higher firm valuation and share Higher firm valuation and share

performance performance Reduced risk of corporate crisis and Reduced risk of corporate crisis and

scandalsscandals

Corporate Governance PartiesCorporate Governance Parties Shareholders – those that own the Shareholders – those that own the

companycompany

Directors – Guardians of the Company’s Directors – Guardians of the Company’s assets for the Shareholdersassets for the Shareholders

Managers who use the Company’s assetsManagers who use the Company’s assets

Four Pillars Four Pillars of Corporate Governanceof Corporate Governance

AccountabilityAccountability

FairnessFairness

TransparencyTransparency

IndependenceIndependence

Accountability Accountability Ensure that management is Ensure that management is

accountable to the Boardaccountable to the Board

Ensure that the Board is accountable Ensure that the Board is accountable to shareholdersto shareholders

FairnessFairness Protect Shareholders rightsProtect Shareholders rights

Treat all shareholders including minorities, Treat all shareholders including minorities, equitablyequitably

Provide effective redress for violationsProvide effective redress for violations

TransparencyTransparency

Ensure timely, accurate disclosure on all Ensure timely, accurate disclosure on all material matters, including the financial material matters, including the financial situation, performance, ownership and situation, performance, ownership and

corporate governancecorporate governance

IndependenceIndependence Procedures and structures are in place so Procedures and structures are in place so

as to minimise, or avoid completely as to minimise, or avoid completely conflicts of interestconflicts of interest

Independent Directors and Advisers i.e. Independent Directors and Advisers i.e. free from the influence of othersfree from the influence of others

Elements of Corporate GovernanceElements of Corporate Governance Good Board practicesGood Board practices

Control EnvironmentControl Environment

Transparent disclosureTransparent disclosure

Well-defined shareholder rightsWell-defined shareholder rights

Board commitmentBoard commitment

Good Board PracticesGood Board Practices Clearly defined roles and authoritiesClearly defined roles and authorities

Duties and responsibilities of Directors Duties and responsibilities of Directors understoodunderstood

Board is well structuredBoard is well structured

Appropriate composition and mix of skills Appropriate composition and mix of skills

Control EnvironmentControl Environment Internal control proceduresInternal control procedures

Risk management framework presentRisk management framework present

Disaster recovery systems in placeDisaster recovery systems in place

Media management techniques in useMedia management techniques in use

Control EnvironmentControl Environment Business continuity procedures in placeBusiness continuity procedures in place

Independent external auditor conducts Independent external auditor conducts auditsaudits

Independent audit committee establishedIndependent audit committee established

Internal Audit FunctionInternal Audit Function

Transparent DisclosureTransparent Disclosure Financial Information disclosedFinancial Information disclosed

Non-Financial Information disclosedNon-Financial Information disclosed

Financials prepared according to Financials prepared according to International Financial Reporting International Financial Reporting Standards (IFRS)Standards (IFRS)

Transparent DisclosureTransparent Disclosure Companies Registry filings up to dateCompanies Registry filings up to date

High-Quality annual report publishedHigh-Quality annual report published

Web-based disclosureWeb-based disclosure

Well-Defined Shareholder RightsWell-Defined Shareholder Rights

Minority shareholder rights formalisedMinority shareholder rights formalised

Well-organised shareholder meetings Well-organised shareholder meetings conductedconducted

Clearly defined and explicit dividend policyClearly defined and explicit dividend policy

Board CommitmentBoard Commitment The Board discusses corporate governance The Board discusses corporate governance

issues and has created a corporate issues and has created a corporate governance committeegovernance committee

The company has a corporate governance The company has a corporate governance championchampion

A corporate governance improvement plan A corporate governance improvement plan has been createdhas been created

Board CommitmentBoard Commitment Policies and procedures have been Policies and procedures have been

formalised and distributed to relevant staffformalised and distributed to relevant staff

A code of ethics has been developedA code of ethics has been developed

The company is recognized as a corporate The company is recognized as a corporate governance leadergovernance leader

Other EntitiesOther Entities Corporate Governance applies to all types Corporate Governance applies to all types

of organisations not just companies in the of organisations not just companies in the private sector but also in the not for profit private sector but also in the not for profit and public sectorsand public sectors

Examples are NGOs, schools, hospitals, Examples are NGOs, schools, hospitals, pension funds, state-owned enterprisespension funds, state-owned enterprises