Corporate Governance
Corporate Governance
Corporate Governance
What is Governance?
Corporate Governance is the application of best management practices, Compliance of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders. -The Institute of Company Secretaries of India
Impact of Globalisation: Integration with Foreign Market Foreign Investors expectations New Business Opportunities --- IT & ITES, BPO etc., New Capital formation FII, FDI
Impact of Privatisation:
New structure of ownership Multinational Companies
Became mandatory for listed companies through the listing agreement, and implemented according to a rollout plan:
2000-01: All Group A companies of the BSE or those in the S&P CNX Nifty index 80% of market cap. 2001-02: All companies with paid-up capital of Rs.100 million or more or net worth of Rs.250 million or more. 2002-03: All companies with paid-up capital of Rs.30 million or more
Anglo-American model
German model of CG
Japanese model of CG
German model
Fundamentals& principles based on German Stock Corporation Act & German Codetermination Act Prescribes 2 boards ( mgmt & supervisory) with separate members Voting right restrictions are legal Banks hold long-term stakes and banking representatives are elected to German boards
Japanese model
Characterised by high level of stock ownership by affiliated banks and companies Financial network is called keiretsu Equity financing plays a major role Based on the corporations financial performance, the BoD is selected