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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. Since corporate
governance also provides the framework for attaining a company's objectives, it
encompasses practically every sphere of management, from action plans and
internal controls to performance measurement and corporate disclosure.
Corporate governance refers to the set of systems, principles and processes by
which a company is governed. They provide the guidelines as to how the company
can be directed or controlled such that it can fulfil its goals and objectives in a
manner that adds to the value of the company and is also beneficial for all
stakeholders in the long term. Stakeholders in this case would include everyone
ranging from the board of directors, management, shareholders to customers,
employees and society.Corporate Governance as a systemic process by which
companies are directed and controlled to enhance their wealth generating capacity.
Since large corporations employ vast quantum of societal resources, we believe
that the governance process should ensure that these companies are managed in a
manner that meets stakeholders aspirations and societal expectations.
Corporate Governance initiative is based on two core principles. These are :
Management must have the executive freedom to drive the enterprise
forward without undue restraints; and this freedom of management should
be exercised within a framework of effective accountability.
It believes that any meaningful policy on Corporate Governance must
provide empowerment to the executive management of the Company, and
simultaneously create a mechanism of checks and balances which ensures
that the decision making powers vested in the executive management is not
only not misused, but is used with care and responsibility to meet
stakeholder aspirations and societal expectations
checks and balances. Control should prevent misuse of power, facilitate timely
management response to change, and ensure that business risks are pre-emptively
and effectively managed.
Ethical Corporate Citizenship:
CG believes that corporations like itself have a responsibility to set exemplary
standards of ethical behaviour, both internally within the organisation, as well as in
their external relationships. We believe that unethical behaviour corrupts
organisational culture and undermines stakeholder value.
The corporate governance framework consists of
(1) explicit and implicit contracts between the company and the stakeholders for
distribution of responsibilities, rights, and rewards,
(2) procedures for reconciling the sometimes conflicting interests of stakeholders
in accordance with their duties, privileges, and roles, and
(3) procedures for proper supervision, control, and information-flows to serve as a
system of checks-and-balances. Also called corporation governance.