Usually the company's philosophy on corporate governance is to attain the highest degree of transparency, accountability and integrity. The actual concept of corporate governance is to satisfy the aspirations of stack holders, customers, suppliers, leaders, employees, the shareholders as well as the expectations with the society. The Board of directors sports ths broad principles of corporate governance and direct the act of the corporation to achieve it's a vowed purpose of transparency, accountability and integrity.
corporate governance definition
Fundamental principles of corporate governance:
The basic objective of corporate governance would be to maximize long term shareholder value. Therefore, good governance should address all issues that create a value addition for that organization and serve the interests of all of the stakeholders.
Transparency means accurate, adequate and timely disclosure of relevant information towards the stakeholders. Without transparency, it is impossible to make any progress towards good governance. Business heads should understand that transparency also creates immense shareholder value. But, information Sharing is hindered under the excuse of confidentiality. There's have to move towards international standards in terms of disclosure of data through the corporate sector and through all this to build up an advanced level of public confidence in operation. Once a company has public shareholding it is imperative that its commitment to financial transparency has to be total. The business is a trustee from the investors' money and also this responsibility in turn demands full disclosure. Corporations in India must learn how to use transparency and impeccable integrity because these will be the essential ingredients to increase their wealth and insightful the world. Transparency and disclosure are the pillars of corporate governance because they provide every one of the stakeholders with the information essential to judge whether their interests are increasingly being cared for.
Corporate governance a top down approach chairman, Board of directors and chief executives must fulfill their responsibilities to create corporate governance possible in Indian Industry. In companies with good governance, accountability is not just bottom up but in addition follows the opposite order. A department head is in charge of every decision adopted behalf of his department. Accountant also favors the goal of creating shareholder value.
Merit based Management:
A powerful board of directors is necessary to lead and support merit based management. The board must be a completely independent, strong and non- partisan body where the sole motive should be selection through business prudence. Though corporate governance is much broader than corporate management, an efficient and efficient administration of corporate sector is essential for meeting the desired objectives. Corporate governance ensures that long term strategic objectives and plans are established which the appropriate management structure is within place it achieve those objectives yet still time making certain the framework functions to keep the business's integrity, reputation and responsibility for the various stakeholders. Thus, corporate governance involves the broad parameters of reporting system accountability and control.
Suggested Selection of items being contained in the Set of Corporate Governance in the Annual Reports of Boards:
1. A brief statement on company's philosophy on code of governance.
2. Board of Directors(BOD):
- Composition and category of directors.
- Attendance of each director on the BOD meetings and also the last Annual General Meeting.
- Number of other BODS or Board Committees he/she can be a member or chairperson of.
- Variety of BOD meetings held, dates on which held.
3. Audit Committee:
- Brief description of terms of reference.
- Composition, names of members and chairperson.
- Meetings of attendance in the past year.
4. Remuneration committee:
- Brief description of regards to reference.
- Composition, names of members and chairperson.
- Attendance in the past year.
- Remuneration policy.
- Specifics of remuneration to all or any the directors, depending on format in leading report.
5. Shareholders Committee:
- Name of non- executive director heading the committee.
- Name and designation of compliance officer.
- Variety of shareholders compliance officer.
- Variety of shareholders complaints received up to now.
- Number not solved to the satisfaction of shareholders.
- Quantity of pending share transfer.
6. General Body Meetings:
- Location and time, where last Three Annual General Meetings held.
- Whether special resolutions were afflicted by postal ballot last year, information on voting pattern.
- Individual who conducted the postal ballot exercise.
- Process of postal ballot.
- Disclosures on materially significant related party transactions i.e., transactions from the company of material nature, using its promoters, the directors, the management, their subsidiaries or relatives etc., that may have potential conflict with all the interests of company as a whole.
- Information on non- compliance by the company penalties, structures imposed around the company from the stock exchange, SEBI or any statutory authority, on any matter linked to capital markets, during the last three years.
8. Method of communication:
- Half yearly report shipped to each household of shareholders.
- Quarterly leads to which web site, where displayed.
- Where in addition, it displays official news releases.
- The presentations built to institutional investors or to the analysts.
9. General shareholder information:
- Annual General meeting: Date, Time and Venue- Financial Calendar - Date of Book closure - Dividend payment date- Listing on stock markets - stock code - Rate data:- High low during each month in last financial year. Performance in comparison to broad based indices including BSE Sensex, CRISIL Index, etc.,
- Registrar and Trade Agents: Share transfer system - Distribution of Share holding - dematerialization of shares and liquidity - Outstanding warrants or any convertible instruments, conversion date and certain effect on equity- Plant locations - address for correspondence.
Way forward for Corporate Governance:
Nowadays, more and more progressive companies are drawing and enforcing codes of conduct and accepting tougher accounting standards that are mandated by law. These tendencies will be further strengthened by a variety of forces like deregulation of economic reforms, disintermediation of economic sector reforms, institutionalization of capital markets, globalization of financial markets and tax reforms for block money transactions.