2. Definition  Governance  Corporate Body Companies Public Sector Social Sector

3. Important Issues  Accountability  Stakeholders  Transparency  Governance/ Board Structures  Monitoring Performance

4. CG in Public Sector Seven Principles of Public Life  Selflessness  Integrity  Objectivity  Accountability  Openness  Honesty  Leadership

5. Dominant Personality Aspect  Principal cause of CG issues  Characteristics of a dominant leader Charismatic Powerful Intolerant Often seemingly sincere Does not nurture subordinates

6. Stakeholders  Board of Directors elected by shareholders Controlling (Majority / Minority) Non-controlling (individual / institutional)  Lenders (individual / institutional)  Management / Employees  Clients / Suppliers  Society (includes government)

7. Key Persons  Mr Shareholder Individual / Institutional Investor  Chairman  Board Members Executive / Non-executive Independent / Nominees  CEO  Other Managers / Employees

8. Agency Problem  Minority Controller  Majority Controller  Cost of agency monitoring

9. Key Issues of CG  Financial Reporting and Auditing  Directors Remuneration  Risk Taking  Effective Communication between: Board and shareholders Company and stakeholders  Corporate Social Responsibility

10. Financial Reporting  Force of Law  Influence of professional bodies  Audit Report – how valid is it?  Does it work?  Role of Institutional Investor Professional analysts  What is the real solution?

11. Directors Remuneration  Big issue in West, not here  Who sets it?  Why do shareholders complain after approving?  Disunity in shareholders?

12. Company-Stakeholders Relations  Structure of the Board Is it representative? Does it have sufficient Independents?  Articles of Association Contents? Allocation of power to stakeholders Actual use of powers

13. Risk Management  WHO CARES: To take risk or not to take risk? How much risk to take? How to minimize / manage risks?  NATURE OF RISKS Operational Takeovers

14. Communication  What needs to be communicated?  Frequency  Set pattern, or need basis  Why communicate?

15. Legislation for CG  Company Law  Regulations for listed companies  Specific CG related laws?  Social pressure can often have the same force as law.

16. Questions asked when companies fail  Was it management incompetence? Why was it not noticed before disaster?  Dishonesty Did the dishonest person get away with it? How? Why? Eventually, this boils down to poor governance.

17. Approaches to CG  Shareholder Value approach  Enlightened Shareholder Approach  Pluralist Approach  Ethical conduct and Code of ethics in CG Assignment of this week

18. Shareholders Approach  Board cares for only shareholders  Shareholder means: All shareholders, or Majority shareholders only, or Vocal shareholders only?  Balanced treatment Between shareholders and others

19. Enlightened Shareholders Approach  Balance between the interest of all stakeholders, but basic attention to shareholders.  Issues: Which shareholders People who wear two or more caps

20. Integrated/Pluralist Approach  Accountability To shareholders, but also to others  Responsibility To all stakeholders.  Means of enforcement

21. The Corporate Sins  Sloth (unwillingness to take risk/initiative)  Greed  Fear

22. What is the Best Approach?  Which  Why  Where