CORPORATE GOVERNANCE

INTRODUCTION Corporate governance is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. The term can refer to internal factors defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as consumer groups, clients, and government regulations.

DEFINITIONGood corporate governance is the glue that holds together responsible business practices, which ensures positive workplace management, marketplace responsibility, environmental stewardship, community engagement, and sustained financial performance. This is even more true now as we work worldwide to restore confi dence and promote economic growth.

SCOPEA well-defined and enforced corporate governance Compliance best practices provides a structure that, at least in theory, works for the benefit of everyone concerned by ensuring that the enterprise adheres to accepted ethical standards and best practices as well as to formal laws. To that end, organizations have been formed at the regional, national, and global levels. In recent years, corporate governance has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, alleged criminal activity by corporate officers. An integral part of an effective corporate governance regime includes provisions for civil or criminal prosecution of individuals who conduct unethical or illegal acts in the name of the enterprise.

COVERAGEEffective boardroom performanceControl and regulationExecutive leadershipThe role and contribution of external (non-executive) directorsThe growing importance of governance in the wake of ever-greater corporate scandalsRedefinitions and reassessments of corporate governance modelsThe role of business in societyThe changing nature of the relationship and responsibilities of the firm towards various stakeholdersThe incentives required to encourage more socially- and environmentally-responsible corporate actionThe role and impact of local and international regulatory agencies and regimes on corporate behaviour.

Key Benefits

Keep abreast of developing trends in the fieldExamine the role and performance of Boards of DirectorsDiscover how governance issues are raised, challenged and resolvedImplement successful decision making processes within your organisation

Why is corporategovernance important?

Corporate governance refers to the way that Boards oversee the running of a company by its managers, and how Board members are held accountable to shareowners and the company. This has implications for company behavior not only to shareowners but also to employees, customers, those financing the company, and other stakeholders, including the communities in which the business operates. Research shows that responsible management of environmental, social and governance issues creates a business ethos and environment that builds both a companys integrity within society and the trust of its shareowners.

Principles of good corporate Governance?

The Corporate Governance in IndiaOne of the major economic developments of this decade has been the recent take-off of India, with growth rates averaging in excess of 8% for the past four years, a stock market that has risen over three-fold in as many years and a steady inflow of foreign investment. In 2006, total equity issuance reached $19.2 billion in India, up 22%, while merger and acquisition volume was a record $27.8 billion, up 38%, driven by a 371% increase in outbound acquisition--exceeding for the first time inbound deal volumes. Debt issuance reached an all-time high of $13.7 billion, up 28% from a year earlier. Indian companies were also among the world's most active issuers of depositary receipts in the first half of 2006, accounting for one in three new issues globally, according to the Bank of New York. And, in each of the years 2005 and 2006, the number of trades on the National Stock Exchange of India, one of the two major Indian Stock Exchanges, was third highest in the world, just behind NASDAQ and the New York Stock Exchange, and several times greater than the number of trades on the London Stock Exchange or Euronext. The long-term sustainability of the India success story depends critically on the state of corporate governance in the country.

Corporate Governance Cases in IndiaScandal at Satyam: Truth, Lies and Corporate Governance When terrorists attacked Mumbai last November, the media called it "India's 9/11." That tragedy has been succeeded by another that has been dubbed "India's Enron." In one of the the biggest frauds in India's corporate history, B. Ramalinga Raju, founder and CEO of Satyam Computers, India's fourth-largest IT services firm, announced on January 7 that his company had been falsifying its accounts for years, overstating revenues and inflating profits by $1 billion. Ironically, Satyam means "truth" in Sanskrit, but Raju's admission -- accompanied by his resignation -- shows the company had been feeding investors, shareholders, clients and employees a steady diet of asatyam (or untruth), at least regarding its financial performance. (Editor's note: Satyam is a corporate sponsor of India Knolwedge@Wharton.)Raju's departure was followed by the resignation of Srinivas Vadlamani, Satyam's chief financial officer, and the appointment of Ram Mynampati as the interim CEO. In a press conference held in Hyderabad on January 8, Mynampati told reporters that the company's cash position was "not encouraging" and that "our only aim at this time is to ensure that the business continues." A day later, media reports noted that Raju and his brother Rama (also a Satyam co-founder) had been arrested -- and the government of India disbanded Satyam's board. Though control of the company will pass into the hands of a new board, the government stopped short of a bailout -- it has not offered Satyam any funds. Meanwhile, a team of auditors from the Securities and Exchange Board of India (SEBI), which regulates Indian public companies, has begun an investigation into the fraud. Since Satyam's stocks or American Depository Receipts (ADRs) are listed on the Bombay Stock Exchange as well as the New York Stock Exchange, international regulators could swing into action if they believe U.S. laws have been broken. At least two U.S. law firms have filed class-action lawsuits against Satyam, but given the company's precarious finances, it is unclear how much money investors will be able to recover.

DINESH DALMIAS STOCK SCAM :- Dinesh Dalmia was the managing director of DSQ Software Limited when the Central Bureau of investigation arrested him for his involvement in a stocks scam of Rs 595 crore (Rs. 5.95 bllion). Dalmia & aposis group included DSQ Holdings Ltd, Hulda Properties and Trades Ltd. Dalmia resorted to illegal ways to make money through the partly paid shares of DSQ Software Ltd. In the name of New Vision Investment Ltd., UK, and unalloted shares in the name of Dinesh Dalmia Technology Trust. Investigation showed that 1.30 crore (13 million shares of DSQ Software Ltd. Had not been listed on any stock exchange.

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