CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Corporate governance is the

system of rules, practices and
processes by which a company is
directed and controlled. Corporate
governance
essentially
involves
balancing
the
interests
of
a
company's many stakeholders, such
as
shareholders,
management,
customers, suppliers, financiers,
government and the community.

PARTIES TO CORPORATE GOVERNANCE

A board of directors often plays a key role in

corporate
governance.
It
is
their
responsibility to endorse the organizations
strategy, develop directional policy, appoint,
supervise and remunerate senior executives
and to ensure accountability of the
organization to its owners and authorities.
Directors, workers and management receive
salaries, benefits and
reputation, while
shareholders
receive
capital
return.
Customers receive goods and services;
suppliers receive compensation for their
goods or services.

CORPORATE GOVERNANCE SYSTEM

FOUR PILLARS
OF CORPORATE GOVERNANCE

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

PRINCIPLES OF CORPORATE GOVERNANCE

Rights and equitable treatment of

shareholders
Interests of other stakeholders
Role and responsibilities of the
board
Integrity and ethical behaviour
Disclosure and transparency

LIFTING OF CORPORATE VEIL

As a general rule a corporation is a

legal
entity
distinct
from
its
shareholders. The law on when a
Court may disregard this principle by
lifting
the
corporate
veil
and
regarding the company as a mere
agent or puppet of its controlling
shareholder or parent corporation
follows no consistent principle.

BENEFITS OF CORPORATE GOVERNANCE

Good
corporate
governance
ensures
corporate
success and economic growth.
Strong corporate governance maintains investors
confidence, as a result of which, company can raise
capital efficiently and effectively.
It lowers the capital cost.
There is a positive impact on the share price.
It provides proper inducement to the owners as well
as managers to achieve objectives that are in
interests of the shareholders and the organization.
Good corporate governance also minimizes wastages,
corruption, risks and mismanagement.
It helps in brand formation and development.
It ensures organization in managed in a manner that
fits the best interests of all.