1.

A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy
most of the rights and responsibilities that an individual possesses; that is, a corporation has
the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own
assets and pay taxes.
2.
Corporate governance - The framework of rules and practices by which a board of
directors ensures accountability, fairness, and transparency in a company's relationship with its
all stakeholders (financiers, customers, management, employees, government, and the community).
Read more: http://www.businessdictionary.com/definition/corporate-governance.html#ixzz4DMHFlsV3
3.

Corporate governance framework

This framework provides an overview of the corporate governance structures,
principles, policies and practices of the Board of Directors of Royal Bank of Canada
(RBC or the bank), which together enable RBC to meet governance expectations of
the Office of the Superintendent of Financial Institutions Canada (OSFI), the
Canadian Securities Administrators (CSA) and the U.S. Securities and Exchange
Commission (SEC). To serve the interests of shareholders and other stakeholders,
RBCs corporate governance system is subject to ongoing review, assessment and
improvement. The Board of Directors proactively adopts governance policies and
practices designed to align the interests of the Board and management with those
of shareholders and other stakeholders and to promote the highest standards of
ethical behaviour and risk management at every level of the organization.

The Role and Benefits of a Corporate

Governance Framework
Having a common governance framework can play an important
role in helping boards gain a better understanding of their
oversight role. The framework should have attributes that
contribute to effective governance and tools for addressing
governance risk. A framework also provides a more cogent
construct for evaluating how managements responsibilities fit with
the boards oversight responsibilities.

Risk Intelligent Enterprise

The foundation to an effective governance program is effective
risk management, which is the focus of Deloittes Risk Intelligent
Enterprise model (see Figure 1 in Framing the Future of Corporate
Governance). It is important to keep in mind that the Deloitte
Governance Framework is not a template or a one size fits all
approach, and will likely evolve over time. The parties responsible
for the Risk Intelligent Enterprise can be summarized as: 1) the
board of directors, who are responsible for oversight and setting
the tone at the top; 2) executive management, who are
responsible for driving governance and risk practices throughout
the organization; and 3) the business units and supporting
functions, which are where the risk activities occur and ownership
lies. These same parties have critical roles in the overall
governance programs as well; however, the responsibilities may
not be clear to all involved.
A Tool for Addressing Governance Risk
Why do boards and management teams need a governance
framework to operate? A framework helps define the role of the
board and management, delineates duties and helps prevent
duplicated efforts and the overlooking of critical issues. It can also
assist with the execution of the boards core processes by
providing structure to policies and tools (e.g., annual calendar,
meeting agendas, committee charters and guidelines). This allows
the board to focus on the right issues and properly prioritize its
limited time and resources. In addition, a framework provides the
board with a structured way to collaborate with management on
specific issues the company faces with minimal risk of confusion
and loss of productivity. Lastly, a framework can help clarify each
board committees roles in fulfilling the boards objectives from a
governance perspective.
In developing the Deloitte Governance Framework (see Figure 2
in Framing the Future of Corporate Governance), consideration

was given to a number of questions with which boards often

struggle, including:

What should the board be doing in the critical areas of oversight, such as strategy and risk?
In dealing with legal and regulatory compliance, how can the board be positioned as a strategic
partner with management?

The framework offers an end-to-end view of corporate

governance. It forms the basis for the tools that help boards and
executives identify opportunities to improve effectiveness and
efficiency.
The Boards Unique Role
The Deloitte Governance Framework proposes that there are at
least five critical elements of the organizations governance
program those related to talent, performance, strategy,
governance and integrity that the board cannot simply delegate
to management. In each of these respective elements,
stakeholders expect that the board is not solely serving as a
monitor of management programs. The board has a specific role
to play, such as in the selection of the CEO. Risk and culture sit at
the core of the governance framework, as everything the board
and management do to create and maintain effective governance
programs is predicated on the existence of strong risk
management and a culture that supports doing the right thing.
The board has a set of key objectives and activities for each of
these governance elements, which could be described as:

Governance: The board establishes structures and processes to fulfill board responsibilities that
consider the perspectives of investors, regulators and management, among others. The board selects
its members and leader(s) via an inclusive and thoughtful process, aligned with company strategy.

Strategy: The board advises management in the development of strategic priorities and plans
that align with the mission of the organization and the best interests of stakeholders, and that have an
appropriate short-, mid- and long-range focus. The board also actively monitors managements
execution of approved strategic plans as well as the transparency and adequacy of internal and external
communication of strategic plans.

Performance: The board reviews and approves company strategy, annual operating plans and
financial plans. It also monitors management execution against established budgets as well as
alignment with strategic objectives of the organization.

Integrity: The board sets the ethical tenor for the company, while management adopts and
implements policies and procedures designed to promote both legal compliance and appropriate
standards of honesty, integrity and ethics throughout the organization.

Talent: The board selects, evaluates and compensates the CEO and oversees the talent
programs of the company, particularly those related to executive leadership and potential successors to
the CEO. The board communicates executive compensation and succession decisions in a clear
manner.

Risk governance: The board understands and appropriately monitors the companys strategic,
operational, financial and compliance risk exposures, and it collaborates with management in setting risk
appetite, tolerances and alignment with strategic priorities.

For some elements, the boards role could be thought of as one of

active monitor, with the board understanding the operating models
that are in place, determining such models are adequately
developed and resourced, monitoring the output and any issues
identified in the process, and so forth.
Attributes that Contribute to Governance Effectiveness
There are four attributes that help assess the boards performance
level and put the framework into action. A board can use these
attributes to help identify its strengths and opportunities for
improvement within each of the governance elements:

Skills and knowledge: What are the skills that are needed for the board to effectively execute its
responsibilities?

Process: What processes are necessary for the board to both understand and properly oversee
the activities of the organization?

Information: Is the information received by the board adequate to support effective oversight and
decision-making?

Behavior: Does the boards behavior support and reinforce strong oversight?

These very broad questions can help to start the process of

identifying gaps and opportunities for improvement within the
overall framework. Once the broad questions have been
addressed, the board can get more tactical and drill down to more
analysis of development opportunities within the various elements.
For example, a board may find the quality and timeliness of
information provided by management with respect to performance
to be quite adequate, while determining that the information

available related to the strategic planning process needs work.

This high-level prioritization helps to take the broad concepts of
board effectiveness and create manageable activities.

OBJECTIVES OF GOOD GOVERNANCE

Concept and Objectives
Corporate Governance may be defined as a set of systems, processes and principles which ensure that a
company is governed in the best interest of all stakeholders. It is the system by which companies are
directed and controlled. It is about promoting corporate fairness, transparency and accountability. In other
words, 'good corporate governance' is simply 'good business'. It ensures:

Adequate disclosures and effective decision making to achieve corporate objectives;

Transparency in business transactions;

Statutory and legal compliances;

Protection of shareholder interests;

Commitment to values and ethical conduct of business.

In other words, corporate governance is the acceptance by management of the inalienable rights of
shareholders as the true owners of the corporation and of their own role as trustees on behalf of the
shareholders. It deals with conducting the affairs of a company such that there is fairness to all stakeholders
and that its actions benefit the greatest number of stakeholders. In this regard, the management needs to
prevent asymmetry of benefits between various sections of shareholders, especially between the ownermanagers and the rest of the shareholders.
It is about commitment to values, about ethical business conduct and about making a distinction between
personal and corporate funds in the management of a company. Ethical dilemmas arise from conflicting
interests of the parties involved. In this regard, managers make decisions based on a set of principles
influenced by the values, context and culture of the organization. Ethical leadership is good for business as
the organization is seen to conduct its business in line with the expectations of all stakeholders.
The aim of "Good Corporate Governance" is to ensure commitment of the board in managing the company in
a transparent manner for maximizing long-term value of the company for its shareholders and all other
partners. It integrates all the participants involved in a process, which is economic, and at the same time
social.
The fundamental objective of corporate governance is to enhance shareholders' value and protect the
interests of other stakeholders by improving the corporate performance and accountability. Hence it
harmonizes the need for a company to strike a balance at all times between the need to enhance
shareholders' wealth whilst not in any way being detrimental to the interests of the other stakeholders in the
company. Further, its objective is to generate an environment of trust and confidence amongst those having
competing and conflicting interests.
It is integral to the very existence of a company and strengthens investor's confidence by ensuring
company's commitment to higher growth and profits. Broadly, it seeks to achieve the following objectives:

A properly structured board capable of taking independent and objective decisions is in place at the
helm of affairs;

The board is balance as regards the representation of adequate number of non-executive and
independent directors who will take care of their interests and well-being of all the stakeholders;

The board adopts transparent procedures and practices and arrives at decisions on the strength of
adequate information;

The board has an effective machinery to subserve the concerns of stakeholders;

The board keeps the shareholders informed of relevant developments impacting the company;

The board effectively and regularly monitors the functioning of the management team;

The board remains in effective control of the affairs of the company at all times.

The overall endeavour of the board should be to take the organisation forward so as to maximize long term
value and shareholders' wealth.

BENEFITS OF GOOD GOVERNANCE

WHY IS GOOD GOVERNANCE IMPORTANT?
Good governance is important for several reasons. It not only
gives the local community confidence in its council, but improves
the faith that elected members and officers have in their own
local government and its decision-making processes.
It also leads to better decisions, helps local government meet its
legislative responsibilities and importantly provides an ethical
basis for governance.
BENEFITS OF GOOD GOVERNANCE
Promotes community confidence
People are more likely to have confidence in their local government if decisions are made in a transparent and
accountable way.
This helps people feel that local government will act in the communitys overall interest, regardless of differing
opinions.

It also encourages local governments to remember that they are acting on behalf of their community and helps
them to understand the importance of having open and ethical processes which adhere to the law and stand up
to scrutiny.
Encourages elected members and council officers to be confident
Elected members and council officers will feel better about their involvement in local government when good
governance is practised.
Councillors will be more confident that they are across the issues, that they can trust the advice they are given,
that their views will be respected even if everyone doesnt agree with them, and that the council chamber is a
safe place for debate and decision making.
Officers will feel more confident in providing frank and fearless advice which is acknowledged and respected by
councillors.
Leads to better decisions
Decisions that are informed by good information and data, by stakeholder views, and by open and honest
debate will generally reflect the broad interests of the community.
This does not assume that everyone will think each decision is the right one. But members of the community
are more likely to accept the outcomes if the process has been good, even if they dont agree with the decision.
They will also be less tempted to continue fighting or attempting to overturn the decision. So even the most
difficult and controversial decisions are more likely to stick.
Helps local government meet its legislative responsibilities
If decision-making is open and able to followed by observers, it is more likely that local governments will
comply with the relevant legal requirements. They will also be less likely to take shortcuts or bend the rules.
Supports ethical decision making
Good governance creates an environment where elected members and council officers ask themselves what is
the right thing to do? when making decisions.
Making choices and having to account for them in an open and transparent way encourages
honest consideration of the choices facing those in the governance process. This is the case even when
differing moral frameworks between individuals means that the answer to what is the right thing to do is not
always the same.