Rachna Bansal Jora

 Corporate Governance is a concept emerging from the agency theory, as to synchronize between the owner and management’s interests. The achievement of corporate performance relies on the mechanism efficiency of Corporate Governance both internally and externally. 2Rachna Bansal Jora, Sharda University

 The foremost sets of controls for a corporation come from its internal mechanisms. These controls monitor the progress and activities of the organization and take corrective actions when the business goes off track. Maintaining the corporation's larger internal control fabric, they serve the internal objectives of the corporation and its internal stakeholders, including employees, managers and owners. These objectives include smooth operations, clearly defined reporting lines and performance measurement systems. Internal mechanisms include oversight of management, independent internal audits, structure of the board of directors into levels of responsibility, segregation of control and policy development. 3Rachna Bansal Jora, Sharda University

 Board of Directors  Board composition  Independent directors  Duties and power of board  Remuneration of directors  Functional Committees of Board  CSR Committee, SRC, NRC, Audit Committee  Code of Conduct  Whistle Blowers and VIGIL Mechanism (Please refer New Companies Act 2013) 4Rachna Bansal Jora, Sharda University

 External control mechanisms are controlled by those outside an organization and serve the objectives of entities such as regulators, governments, trade unions and financial institutions. These objectives include adequate debt management and legal compliance. External mechanisms are often imposed on organizations by external stakeholders in the forms of union contracts or regulatory guidelines. External organizations, such as industry associations, may suggest guidelines for best practices, and businesses can choose to follow these guidelines or ignore them. Typically, companies report the status and compliance of external corporate governance mechanisms to external stakeholders. 5Rachna Bansal Jora, Sharda University

 Regulators  Gate Keepers  Institutional Investors  Market Forces  Media  Market Competition  Takeover Activities, etc. 6Rachna Bansal Jora, Sharda University

 SEBI : The Securities and Exchange Board of India  MCA: Ministry of Corporate Affairs  RBI: Reserve Bank of India  IRDA: Insurance Regulatory Development Authority  IICA: Indian Institute of Corporate Affairs  NFCG: National Foundation for Corporate Governance  Indian Companies Act 2013  SEBI Act 1992  Institute of Chartered Accountants  Institute of Company Secretaries of India  Various Corporate Governance Committees (Kumar Mangalam Birla Committee; Narayana Murthy Committee; Naresh Chandra Committee; J.J. Irani Committee) 7Rachna Bansal Jora, Sharda University

 Gatekeepers are the intermediaries who provide important services that benefit investors – for example credit rating agencies hat evaluate a company’s creditworthiness, outside auditors who provide independent assurance that its financial condition is portrayed fairly, securities analysts who assess its business prospects and Lawyers. 8Rachna Bansal Jora, Sharda University

 Organizations which pool a large sums of money and invest those sums in companies.  Act as highly specialized investors on behalf of others.  Examples- Insurance Companies, pension funds, mutual funds, Investment Trust, Investment Bank, etc.  An institutional investor can have some influence in the management of corporations because it will be entitled to exercise the voting rights in a company. Thus, it can actively engage in corporate governance. 9Rachna Bansal Jora, Sharda University

 Institutional investors effectively use the voting process as a tool to affect outcomes, particularly at firms with weak corporate governance, poor performance, and when contentious proposals related to compensation, anti-takeover and corporate control are on the ballot. 10Rachna Bansal Jora, Sharda University

 Market for Corporate Control: Purchase of a firm that is underperforming relative to industry rivals in order to improve its strategic competitiveness. 11Rachna Bansal Jora, Sharda University

 Role of SEBI in SATYAM SCANDAL 12Rachna Bansal Jora, Sharda University