cg with mythological example
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CorporateGovernance
Satyam Vada
Dharmam Chara
- TaittariyaUpanishad
Forever speak the
truth and follow the
dharma
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Governance Concept in Ramayana
To provide the maximum happiness for the
maximum number of people for the maximum
period, based on the principles of Dharma
righteousness and moral values
- Ayodhya Kand
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Corporate GovernanceWhat is Governance?
Purpose of corporate governance is to have a demonstrable
IMPACT on a corporations I!A!CIA" P#R$RMA!C#%
&Corporate Governance is the application of best managementpractices' Compliance of la( in true letter and spirit andadherence to ethical standards for effective management and
distribution of (ealth and discharge of social responsibility forsustainable development of all sta)eholders*%
-The Institute of Company Secretaries of India
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+riving orces of CG in India
,-,- .nethical /usiness Practices.nethical /usiness Practices 0ecurity 0cams 1112arshad Mehtha 0ecurity 0cam0ecurity 0cams 1112arshad Mehtha 0ecurity 0cam
#3uity allotments at discount rates to the controlling groups#3uity allotments at discount rates to the controlling groups
+isappearance of Companies 4,556157- 1 around 7'888+isappearance of Companies 4,556157- 1 around 7'888
companies (ith 9:'888 crores (ithout starting businesscompanies (ith 9:'888 crores (ithout starting business
Misdeed of CompaniesMisdeed of Companies
Plantation' 0heep rearing' etc%Plantation' 0heep rearing' etc%
9-9- Impact of Globali;ationImpact of Globali;ation Integration (ith oreign Mar)etIntegration (ith oreign Mar)et
oreign Investors e
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.nli)e 0outh1#ast and #ast Asia' the corporate governance initiativein India (as not triggered by any serious nation(ide financial'ban)ing and economic collapse
The initiative in India (as initially driven by an industry association'
the Confederation of Indian Industry
In +ecember ,55:' CII set up a tas) force to design a voluntarycode of corporate governance%
The final draft of this code (as (idely circulated in ,55?%
In April ,55@' the code (as released% It (as called DesirableCorporate Governance: A Code.
/et(een ,55@ and 9888' over 9: leading companies voluntarilyfollo(ed the code /aBaB Auto' 2indalco' Infosys' +r% Reddys"aboratories' !icholas Piramal' /harat orge' /0#0' 2+C' ICICI
and many others
/rief history of corporate governancein India
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ollo(ing CIIs initiative' the 0ecurities and #
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ollo(ing CII and 0#/I' the +epartment of Company Affairs 4+CA-modified the Companies Act' ,5: to incorporate specific corporategovernance provisions regarding independent directors and auditcommittees%
In 988,189' certain accounting standards (ere modified to furtherimprove financial disclosures% These (ere
+isclosure of related party transactions%
+isclosure of segment income revenues' profits and capitalemployed%
+eferred ta< liabilities or assets%
Consolidation of accounts%
Initiatives are being ta)en to 4i- account for #0$Ps' 4ii- furtherincrease disclosures' and 4iii- put in place systems that can furtherstrengthen auditors independence%
/rief history of corporate governancein India
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/oard of +irectors fre3uency of meetings and composition
/oard must meet at least four times a year' (ith a ma
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/oard of +irectors fre3uency of meetings and composition
The fre3uency of board meetings and board committee meetings'(ith their dates' must be fully disclosed to shareholders in theannual report of the company%
The attendance record of all directors in board meetings and boardcommittee meetings must be fully disclosed to shareholders in theannual report of the company%
ull and detailed remuneration of each director 4salary' sitting
fees' commissions' stoc) options and per3uisites- must be fullydisclosed to shareholders in the annual report of the company%
"oans given to e
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/oard of +irectors information that must be supplied
Annual' 3uarter' half year operating plans' budgets and updates%
Huarterly results of company and its business segments%
Minutes of the audit committee and other board committees% Recruitment and remuneration of senior officers%
Materially important legal notices and claims' as (ell as anyaccidents' ha;ards' pollution issues and labor problems%
Any actual or e
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/oard of +irectors Audit Committee
Audit Committee is mandatory%
Must have minimum of three members' all non1e
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/oard of +irectors Audit Committee functions
$versight of the companys financial reporting process to ensure thatthe financial statement is correct' sufficient and credible
Appointment removal of e
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/oard of +irectors Audit Committee functions
Ade3uacy of internal audit and internal control systems' throughdiscussion (ith internal and statutory auditors as (ell asmanagement%
0ignificant findings' follo(1up and action ta)en reports%
+iscussion (ith internal and statutory auditors about scope anddesign of audits%
Revie(ing financial and legal ris)s and companys ris) management
policies%
#
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+isclosures to shareholders in addition to balance sheet' P="and cash flo( statement
/oard composition 4e
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+isclosures to shareholders in addition to balance sheet' P=" andcash flo( statement
+ates of boo) closure and dividend payment%
+etails of shareholding pattern%
!ame' address and contact details of registrars andor sharetransfer agents%
+etails about the share transfer system%
0toc) price data over the reporting year' and ho( the companys
stoc) measured up to the inde
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+isclosures to shareholders in addition to balance sheet' P=" and
cash flo( statement
+etailed chapter on Management +iscussion and Analysis focusingon mar)ets' operations' finances' accounts' ris)s' opportunities and
threats' internal control systems%
Consolidated financial statement' incorporating accounts of allsubsidiaries 4over :8F shares held by reporting company-%
+etails of all significant related party transactions%
+etailed segment reporting 4revenues' costs' operating profits andcapital employed-%
+eferred ta< liabilities and assets and debitcredit in the P=" for thereporting year
Mandated CG guidelines anddisclosures
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Recent Misconducts The "ist Goes $nE
Computer Associates Artificially inflated revenue and improperly re(arded top
e
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Corporate Mis1Governance
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Theories of Corporate Governance
Anglo1American model
German model of CG
Oapanese model of CG
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&
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Infosys Technologies The /est amongIndian Corporates
As per the Credit "yonnais 0ecurities Analysis 4C"0A-' thecorporate governance ratings of the 0oft(are firms are higher thanthose of other Indian firms%
Infosys' based in /angalore' is a publicly held' I0$ 588, certifiedcompany offering information technology consulting = soft(areservices%
The soft(are offered include application development' #1Commerce = Internet Consulting' 0oft(are Maintenance%
Respected across the country' (ith very strong systems' highethical values = a nurturing (or)ing atmosphere%
!et income of .0 ,',:: million and revenue of .0 7',? million%
At present having .0 98%7 billion mar)et capitalisation%
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Achievements
Noted as the /est Managed Company in Asia%
/iggest e
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!arayana Murthys Global 0trategy
,- Global +elivery Model> Producing (here it is most costeffective to produce = selling (here it is most profitable to sell%
9- Moving up the Nalue Chain > Getting involved in asoft(are development proBect at the earliest stage of its lifecycle%
6- P0P+ Model > Predictability of Revenues' 0ustainability ofRevenues' Profitability' +e1ris)ing%
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Best Governed Companies
IC0I !ational A(ard for #
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Concluding $bservations
Code of CG should be redesigned to reflect international bestCode of CG should be redesigned to reflect international bestpracticespractices
0tringent enforcement of "a(0tringent enforcement of "a(
More effective coordination and cooperation bet(een 0#/I' +CAMore effective coordination and cooperation bet(een 0#/I' +CA
CG mechanism should be fle
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WINNING
EMPLOYEES
WINNING
EMPLOYEESGROWING
INESTORS
GROWING
INESTORS
!ELIG"TE!
C#STOMERS
!ELIG"TE!
C#STOMERS
TR#STE!
S#PPLIERS
TR#STE!
S#PPLIERS
S$TIS%IE!
GOERNMENT $N!
REG#L$TORS
S$TIS%IE!
GOERNMENT $N!
REG#L$TORS
"$PPY
SOCIETY
"$PPY
SOCIETY
!"#$%&'Debo(it "oy )**Sritanu Das +ahapatra )-.bhise/ Sahu )0
1rishna/ant %andey )23is4a(it !hosh )52