CORPORATE GOVERNANCE :

-VINAY KUMAR THAMMI DEFINITION: its a system by which corporations are direscted and controlled. The system of rules, practices and processes by which a company is directed
and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community.

THE ROLE OF CORPORATES IN INDIA: 1. Economic growth and development. 2. Government services and schemes implemnted via the publivate partnership(PPP) mode and hence has a mjor hand in the shaping of indias future 3. Role in improvement of social indicators like education, health, water, basic services. 4. Role in imports and exports and fortifying the ties with our major trading partners 5. Role of corporates in disaster risk managemnet and post disater relief managemnet. 6. Corporate social responsibility to remove the inequalities and develop those areas not being concentrated by the government. 7. With the uhering in of LPG, corporates have undeniable role in trade and commerce and basic service provider 8. With the governmnet moving away from its role in service providing by the way of disinvestments , corporates have a greater role to play. 9. Bridges the gender justice and encourages the merit and skill development. 10. Dividents of demography can be fructified with active intervention of corporates. 11. Helps in inclusive growth and financial inclusion, this being reflected in PC emphasizing its role in 12th five year plan. 12. Helps the economies in coping up with the financial crisis

The governance structure specifies the distribution of rights and responsibilities among
different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs. PRINCIPLES OF CORPORATE GOVERNANCE: The Cadbury Report (UK, 1992), the Principles of Corporate Governance (OECD, 1998 and 2004), the Sarbanes-Oxley Act of 2002 (US, 2002) has speicified following principles;

Rights and equitable treatment of shareholders

Interests of other stakeholders Role and responsibilities of the board Integrity and ethical behavior Disclosure and transparency NEED FOR CORPORATE GOVERNANCE: The presence of an active group of independent directors on the board
contributes a great deal towards ensuring confidence in the market.

Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. It matters for both the clients (in the form of Improving access to capital, Improving performance) and the corporate (for value addition, Reducing investment risk, Avoiding reputational risk, Developing capital markets ) Dynamic changing structure of ownership

Importance of social responsibility Proliferation and ubiquitous corporate scams in corroboration with state and nonstate entities. Regulate acquisition, mergers, takeovers.

Liberalization and its associated developments, i.e. deregulation, privatization and extensive financial liberalization has made it important.
Greater role of corporate in the presnt world effecting wider array of public. Hence their regulation and control takes primacy over all others.

 EVOLUTION OF CORPORATE GOVERNANCE FRAMEWORK IN INDIA: Companies act of 1956 provided for basic framework for regulation of all the companies in india. Securities Contract Regulations Act, 1956 provided for rules and provisions to be complied by the companies. SEBI Act, 1992 empowered it to control the corporate in listings and recognitions and enforce discipline in the share markets. A separate ministry of corporate affairs has been set up in the government to look into such issues. A committee set up under the chairman ship of rahul bajaj by CII , the CII released the code called Desirable Corporate Governance. It looked intovarious aspects of Corporate Governance and was first to criticize nominee directors and suggested dilution of government stake in companies. SEBI had set up a Commission under Kumarmanlagam Birla. This committee covered issues relating to protection of investor interest, promotion oftransparency, building international standards in terms of disclosure of information. The Department of Companies Affairs (DCA) modified the Companies Act, 1956. It undertakes periodic review and brings about amendments in the Companies Act, 1956. In 1999, the Act introduced the provision relating to nomination facilities for shareholders and share buybacks and for formation of Investor education and protection fund. The Department of Corporate Affairs constituted Naresh Chandra Committee in 2002. The committee talks extensively about the statuary auditor-company relationship, rotation of statutory audit firms/partners, procedure for appointment of auditors and determination of audit fees, true and fair statement of financial affairs of companies. SEBI appointed Narayan Murthy Committee in 2002. Its report mainly focuses on and makes mandatory recommendations regarding responsibilities of audit committee, quality of financial disclosure, requiring boards to assess and disclose business risks in the companys annual reports. Clause 49 of the Listing Agreement : has enlisted following requirements for the corporate governance;

 Independence of board

Independence of directors Duties and remuneration of board and directors Role of audit committee and auditors. Appointments and powers of independent directors. In December 2009, Ministry of Corporate Affairs specified Voluntary Guidelines on Corporate Governance. These guidelines provide for a set of good practices, which will 8help the companies to strengthen their internal governance processes and may be voluntarily adopted by the Indian Public companies. In March 2012, Ministry of Corporate Affairs constituted a committee under the Chairmanship of Mr. Adi Godrej, Chairman, Godrej Industries Limited, to formulate policy document on Corporate Governance. In September, 2012 the Committee submitted its document, specifying seventeen guiding principles on corporate governance. The Companies bill waiting to become companies act 2013, mandates the novel CORPORATE SOCIAL RESPONSIBILITY principle. This would enhance the corporate governance.

ISSUES IN CORPORATE GOVERNANCE:

Value based corporate culture Holistic view Compliance with laws Disclosure, transparency, & accountability Corporate governance and human resource management Innovation Necessity of judicial reforms Globalization helping Indian companies to become global giants based on good corporate governance Lessons from Corporate failure

Inclusion of ethics in corporate governance is the important aspect in the improvement of corporate governance. ETHICAL CORPORATE GOVERNANCE 1. shortest - definitions is, to quote Lord Moulton, "obedience to the unenforceable". 2. Business ethics (also corporate ethics) is a form of applied ethics or professional
ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. NEED FOR ETHICS IN BUSINESS:

Ethics help make relationships mutually pleasant and productive- imbibes a sense of community among members- a sense of belongingness to society. Ethics are the guiding principles for any endeavour. To stop business malpractices Improve customers confidence Survival of business Safeguarding customer rights Protecting the interest of employees and shareholders Develop good relations Healthy competition and consumer satisfaction.

RECENT INITIATIVES TO ENHANCE CORPORATE GOVERNANCE IN INDIA: 1. Green Initiatives in the Corporate Governance : The Ministry of corporate affairs has
allowed paperless compliances by the companies and Registrar of Companies under the provisions of the Companies Act, 1956 . 2. Simplification in Procedures and Process under Companies Act, 1956 3. e-Payments in the Ministry: The payment of filing fee by the companies has been made completely online 4. adoption of International Financial Reporting Standards (IFRS) 5. Investor awareness programmes 6. The Companies Bill, 2012 7. Reorganisation of field offices. 8. Easy Exit Scheme, 2011 9. Setting up of Indian Institute of Corporate Affairs (IICA) 10. Limited Liability Partnership Act 11. National Company Law Tribunal (NCLT) 12. New Bills on Multi State Societies and Multi State Partnerships

13. Various orientation programmes for Directors throughCentres of Excellence, seminars and conferences topropagate propagate the need for following following good corporate corporategovernance practices are being organized. 14. Setting up of NFCG in partnership withstakeholders CII, ICAI, ICSI & FICCI. 15. Setting up of Investor Education and Protection Fund. 16. Amendments to the Acts governing three professional institutes(ICAI/ICSI/ICWAI) (ICAI/ICSI/ICWAI) with a view to strengthen strengthen the disciplinary disciplinarymechanism and bring transparency in their working. 17. Empowering SEBI under the SEBI Clause 49 for greater regulation and monitoring of companies 18. Mandatory corporate social responsibility (CSR) under the companies act 2013.

THE ULTIMATE AIM OF CORPORATE GOVERNANCE IS FOR A PROSPEROUS INDIA

BIBLIOGRAPHY
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1357290354602.pdf http://psrcentre.org/images/extraimages/312018.pdf Wikipedia

Voluntary Guidelines on Corporate Governance, The Ministry of Corporate Affairs, December 2009

By,

Vinay kumar thammi,