Business Ethics Unit-5

8/12/2019 Business Ethics Unit-5

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BUSINESS EHICS

UNIT - V


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CORPORATE GOVERNANCE

Corporate governance refers to the set of systems, principles and processecompany is governed. It provides the guidelines as to how the company c

controlled such that it can fulfill its goals and objectives in a manner that aof the company and is also beneficial for all stakeholders in the long term. defines corporate governance as the the conduct of business in accordashareholders desires which generally is to make as much money as possibconfirming to the basic rules of society embodied in law & local customers

Principles of Corporate Governance

Rights & equitable treatment of shareholders Interests of other stakeholders Role & responsibilities of the board Integrity & ethical behaviour

Disclosure & transparency


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Model of CG

Anglo Americans German Japanese

Shareholders Shareholders& Employees/unions Shareholders&

Elects Elects Elects

Board of Directors Supervisory Board Supervisory BoPresident & Pre

Appoints Appoints Appoints

Officers/Executive Management Board Executive Boar

Manage Manage Manage

Company Company Company

Indian Model = Anglo American Model + GermanModel


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Board of Directors/Board &Corporate Board

Board of Directors/ Corporate Board

They are the elected representatives of shareholders. Members in the BoardAnnual General Meeting. The Board is the supreme authority that is entitled powers except those powers which are exercised exclusively by the sharehmeetings. The success of the company depends upon on the efficient funct

Attributes of the Board of Directors

Board of directors provides guidance & advice to a business or organisation. Ttogether to define a companys mission, review its financials & promote it to thBoard directors who have business insight, good contacts & a strong set valueorganisation for success. The following are the attributes Board of Directors :-

Expertise , Integrity, Enthusiastic, Compatibility, Availability, Diversity, Passion, CanDoAttitude


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Role of Board

The role of Board of Directors is as follows :-

Defining Business

Planning Operations

Appointing Officers of the Company

Convening the meetings of the Company

Representing the Company Performing Checks & Controls

Legal & Regulatory Compliances


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Specific Duties & Responsibilities of Board Attend monthly board & committee meetings, the annual general body me

Reconvene the monthly meeting at a later date if quorum of board is not pr Provide input & participate in the decisions of the board

Read & evaluate monthly financial reports & other board materials before th

Act on all membership applications either directly or through the appointm

membership officer

Approve the credit policy, financial statement, the annual budget & the bus

Work with management to develop short range & long range planning base

Perform an annual written appraisal of the manager based on goals establis

budget & business plan

Determine the minimum ownership share requirement & the maximum amo

may be owned by one member provided that no member shall hold more t

total share amount.


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Directorial Competences

Directors should understand the role & functions of the board, their legal duties & rethe essence & distinctive nature of direction. Awareness & personal qualities such

attributes of competent director.

Board Effectiveness

Directorial Competencies lead to Board effectiveness & Board competency. To aeffectiveness the following aspects are studied

Compliance (conformity) Strategy Policy Making Monitoring Performance Stakeholder Management Board Relations & Composition


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Rules for Protecting Investors

Right to receive dividend on prorata basis

To participate in the shareholders meetings

To vote in meetings for directors

To sue directors for suspected wrong doings

To call extra ordinary shareholders meetings

Corporate Disclosure Policy

This code has been framed in pursuance to the regulation contained in clauseIV of SEBI (Prohibition of Insider Trading) regulation, 1992 inserted by the SEBI (I(Amendment) Regulation, 2002 & the purpose of this code is to ensure timely &disclosure of price sensitive information.


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Board Committees or Subcommittees consisting of the members of the Board o

mandated to carry out specified functions. It is formed with the recommendaClassification of Board Committee

Standing Committees - Standing Committee are developed for ensuring effprocesses, structures & roles, including committee development, board eva

Adhoc Committees - Adhoc Committees are formed for a specific task

Task Force CommitteesA task force is usually organized to deal with a sp

specified task, needed to complete within the given time.

Advisory CommitteesIt is composed of specialized resource persons to athe board of directors in strategic decisionmaking process.

Corporate Board Committee


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Globalization & Corporate Governance

Globalization refers to all those processes by which the people of the world are in

single world society, global society (AL brow 1990). It is the intensification of worldrelations which link distant localities.

Influence of Globalization on Corporate Governance Wide spread agreement on core principles of independence, fairness, transpa

accountability Corporate reporting using international standards Corporate Governance Codebest practice governance standard

Organisation for Economic CoOperation & DevelopmentI. Ensuring the Basis for an Effective Corporate Governance Framework

II. The Rights of Shareholders & Key Ownership FunctionsIII. The Equitable Treatment of ShareholdersIV. The Role of stakeholders in Corporate GovernanceV. Disclosure & TransparencyVI. The Responsibilities of the Board

Documents

Business Ethics Unit-5