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Corporategovernance
1. Corporate Governance
Theory & Practice
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 1
2. Corporate Governance rests with the Vision and
Perception of the Leadership
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 2
3. and
A Leader need to adopt a
Vision for Corporate Governance
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 3
4. Corporate Governance Framework
Wealth Creation Wealth Management Wealth Sharing
?
Distribu-
tion Happiness and
Output – Input Prosperity of all
= Wealth Created Stakeholders
SUPPLIERS
Adequate Returns
Reinvestment HUMAN ASSETS
Enhanced
Capabilities Adequate
Remuneration
CUSTOMERS
Sustainability Affordable Prices
PUBLIC
Research and Payment of Taxes and
Partnership in National
Development Development Projects
HR Development
Infrastructure
Risk Management
Best Management Practices are Vital Here Law and Ethics are Vital
Here
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 4
5. Stakeholders in Value Chain
ROLE OF STAKEHOLDERS
Supply Funds, Value Addition and Give Opportunity to Co.
Materials and Services Management of to Satisfy their Needs
Resources
SUPPLIERS HUMAN
CUSTOMERS
RESOURCE
Adequate Returns for Adequate Salary and Best Quality Products
Funds, Material and Security for leading a and Customer Care at
Services Supplied Happy Life Minimum Prices
EXPECTATIONS OF STAKEHOLDERS
Potential Suppliers, Human Biological, Economic and
Resources and Customers PUBLIC Cultural Environment
PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 5
6. Principles of Corporate
Excellence
Fairness to all stakeholders
Mutual Trust, Transparency and Togetherness
Unrestricted Communication and Continuous Feedback
Sharing Knowledge, Success Stories and Experience
Sharing Happiness and Concerns
Helping Each Other – Round the Clock
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 6
7. Infact, these principles are the foundation of
Best Governed Organisations
irrespective of their form and size
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 7
8. Advantages of applying
Best Corporate Governance Practices
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 8
9. Growing Growing
Revenues Profits
Growth
Growing
Market Value
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 9
10. Widening Ready Market for
Customer Base New Products
Widespread Goodwill and Brand Reputation
Access to Global Better Access to
Markets Human Capital
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 10
11. CUSTOMERS
INVESTORS
EMPLOYEES
Enhanced Trust and
Confidence of all
Stakeholders
GOVERNMENT AND
REGULATORS
SOCIETY
SUPPLIERS
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 11
13. Environment
SUSTAINABLE
DEVELOPMENT
Business Society
Civil Society
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 13
14. Commitment to well-being and progress of all
stakeholders is our age old mantra
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 14
15. Satyam Vada Dharmam Chara
- Taittariya Upanishad
07/04/12 04:43 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 15
16. “Forever speak the truth and follow the dharma”
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 16
17. Truth : Disclosure of Actual State of Affairs
(Transparency in operations and transactions)
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 17
18. Dharma : “Dharma is for the stability of
society, the maintenance of social order and the
general well-being and progress of humankind.”
- Karna Parva of the Mahabharata. Verse-58 in Chapter 69
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 18
19. Governance Concept in ‘Ramayana’
To provide “the maximum happiness for the
maximum number of people for the maximum period,
based on the principles of Dharma – righteousness
and moral values.”
- Ayodhya Kand
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 19
20. “The Customer is King”
- Mahatma Gandhi
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 20
21. This is the soul behind modern
Marketing Management
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 21
22. Worshipping 33 Crore Godheads
signifying various species, plants,
cosmic elements, …
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 22
23. Care for Panchtatvas - Prithvi, Jal, Vaayu,
Akaash and Agni that make a human being
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 23
24. This is our approach to
Environment Protection
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 24
25. The four essential principles of Mahatma Gandhi's
philosophy
Truth, Ahimsa, Trusteeship and Constructive Action
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 25
26. Corporates are also expected to use their
Capacity, Knowledge and Resources
TOWARDS
Dharma
Maximisation of stakeholders’ value and well-
being and progress of humankind
THROUGH
Truth
Transparency, accountability and truthful
disclosure of state of affairs
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 26
27. This is our own age old mantra of
Good Governance
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 27
28. Corporate Governance
Theory & Practice
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 28
29. CG – Theory & Practice
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 29
30. CG In practice - Board Structure
• No procedure for selection of directors resulting into
appointment of relatives.
• No requirements for minimum qualification of directors
• No requirement of training and development of skills of
directors.
• Remuneration vs. Responsibility of independent Directors.
• Mockery of independency by appointment of interdependent
directors.
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 30
31. CG – In spirit
• Selection of directors from a pool of knowledgeable and
respected persons.
• Professional attitude and capability of independent directors
of taking commercial decisions.
• Disclosure of timely and sufficient information to the directors
to enable them to participate effectively.
• Independent directors to have an enquiring mind but not just
a questioning attitude.
• Development of skills of directors through training.
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 31
33. History is Witness
Outstanding Performance, D
S Higher Profits, I
U Expanded Market Reach and the like S
C FAILS A
E to protect a company S
S which has put good governance & ethics T
S at the back burner…. E
R
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 33
34. History has also repeated itself
The SATYAM Fiasco
A mockery of Corporate
Governance
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 34
35. The Satyam Fiasco
• Out casting of Minority Shareholders
• Diversion of property from Company where the promoter
has merely 8.5% stake to a company with 100% stake.
• Attempt to turn company sitting on cash into a debt-ridden
company.
• Fudging of accounts of thousands of Crores.
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 35
36. Secret behind building foundations
..…Only the culture of
strict adherence to good compliance
can keep a company
ahead on sustainable basis , bring in larger profits…
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 36
37. CORPORATE GOVERNANCE
AT
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 37
38. Company Philosophy on Corporate Governance
Corporate Governance standards should go beyond the law.
Maintain high degree of disclosure levels. When in doubt, disclose.
Make a clear distinction between personal conveniences &
corporate resources.
Management is the trustee of the shareholders’ capital and not the
owner.
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 38
39. Board Meetings
1. Scheduling of dates of Board Meetings
2. Drafting of Agenda by Chairman of the Board & Company
Secretary in consultation with Lead Independent Director
3. Circulation to all Directors
4. Recommendations for inclusion of items
5. Inclusion of items in the agenda
6. Meetings of Committees
7. Formal Board Meeting with video conferencing facilities to all
directors
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 39
40. Committees Management
Audit Committee – 6 Members – All Independent Directors
(Cl. 49 requires minimum 3 directors)
Compensation Committee – 4 Members – All Independent
Directors (Non-mandatory under Cl 49)
Nomination Committee – 5 Members – All Independent Directors
(Not required under Cl 49)
Investors’ Grievance Committee – 4 Members – All Independent
Directors (Cl 49 requires only the Chairman to be independent) –
0 Pending Complaint
Investment Committee – 7 Members – All Executive Directors
(Not required under CL 49)
Each committee has its detailed charter.
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 40
41. Compliance with Non-mandatory
requirements
• Maximum tenure of independent directors is nine years.
• Dissemination of regular information to investors through e-mail,
telephone, face-to-face meetings, road shows etc.
• Presentations are made by executive directors to familiarize the
new non-executive directors with the Company’s operations.
• Evaluation of non-executive directors through a peer-evaluation
process.
• Whistle blower policy providing direct access of employees to
Chairperson of Audit Committee.
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 41
42. ICRA –
CGR 1
CRISIL –
And CRISIL GVC
That’s what makes Level 1
Infosys
A value driven organization
07/04/12 by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 42
43. Present Status of CG Practices – The CRISIL
Experience
Practice Status
Equitable Treatment of Moderate
Shareholders
Transparency and Disclosure strong
Relatively
Composition of Board Scope for improvement
Functioning of Board Moderate
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 43
44. Value Addition - The CRISIL Experience
Stakeholders Status
Share Holders High
Debt Holders Highest
Employees Moderate
Customers High
Suppliers Scope for improvement
Society Scope for improvement
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 44
45. Companies that have followed these
principles of
Corporate Governance
have
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 45
46. Consistently earned high returns,
increased their net worth and
enhanced their shareholders wealth
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 46
47. Invested significantly in proactive research and
development
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 47
48. Developed people into ‘achievers’ than just
‘performers’
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 48
49. Dealt ethically with customers, government and
business partners
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 49
50. Maintained and updated their professional
management culture, system and processes
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 50
52. WINNING GROWING
EMPLOYEES INVESTORS
HAPPY
DELIGHTED
SOCIETY
CUSTOMERS
SATISFIED
TRUSTED
GOVERNMENT AND
SUPPLIERS
REGULATORS
07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 52
53. 07/04/12 04:44 AM by Dr.Rajesh Patel,Director, nrv mba ,email:1966patel@gmail.com 53
Notes de l'éditeur
A very good Evening to all of you Distinguished Chief Guest Shri L K Advani, Hon’ble Deputy Prime Minister of India, Justice Shri M N Venkatachalliah, Shri M M K Sardana, Shri G N Bajpai, Shri S Gangopadhyay, Shri N K Jain, Members of the Jury, My Fellow Council Members, Senior Government officials, Corporate Executives, Invitees, Members of Profession, Students, Ladies and Gentlemen.
Ladies and Gentlemen Corporate Governance rests with the Vision and Perception of the Corporate Leadership
and The ICSI has adopted a Vision for Corporate Governance itself
The ICSI Parivar follows principles based on ethics and humanity Fairness to all stakeholders Mutual Trust, Transparency and Togetherness Unrestricted Communication and Continuous Feedback Sharing Knowledge, Success Stories and Experience Sharing Happiness and Concerns Helping Each Other – Round the Clock
In fact, these basic principles are the foundation of Best Governed Organisations, irrespective of their form and size
Corporate Governance is not a buzzword, there are so many advantages of applying good corporate governance practices
The first advantage is GROWTH Growing Revenues Growing Profits Growing Market Value
Companies get Widespread Goodwill and Brand Reputation, resulting into Widening Customer Base Ready Market for New Products Access to Global Markets, and Better Access to Human Capital
and Enhanced Trust and Confidence of all Stakeholders INVESTORS EMPLOYEES CUSTOMERS SUPPLIERS GOVERNMENT AND REGULATORS, and SOCIETY at large
Leading to…
SUSTAINABLE DEVELOPMENT
Ladies and Gentlemen Commitment to well-being and progress of all stakeholders is our age old mantra
Taittariya Upanishad, which has for ages strengthened our centres of education, contains invaluable advice to students passing out from an institute of learning - Satyam Vada Dharmam Chara
“ Forever speak the truth and follow the dharma”
Truthful disclosure of State of Affairs i.e. transparency operations and transactions.
In the Karna Parva of the Mahabharata Chapter 69 says: Dharma is for the stability of society, the maintenance of social order and the general well-being and progress of humankind i.e. the Overall Governance
In Ayodhya Kand of Ramayana, Lord Rama explains the concept of Governance as “ to provide the maximum happiness for the maximum number of people for the maximum period, based as it is on the principles of Dharma –righteousness and moral values.”
Mahatma Gnadhi said “The Customer is King”
This is the soul behind modern Marketing Management
We have been worshipping 33 Crore Gods signifying various species, plants, cosmic elements, … or 33 Crore Components of Nature.
We Care for Panchtatvas - Prithvi, Jal, Vaayu, Akaash and Agni that make a human being
This is our approach to Environment Protection.
The four essential principles of Mahatma Gandhi's philosophy - Truth, Ahimsa, Trusteeship and Constructive Action are widely quoted the worldover. Gandhi said we don't own the talent but we are appointed "Trustees" by God and so we must use the talent to help others, less fortunate or talented than us. The Board of Director being Trustees should work with highest level of integrity and independence and strive for growth of all stakeholders.
Similarly, Corporates are also expected to use their Capacity, Knowledge and Resources towards maximisation stakeholders’ value and well-being and progress of humankind (i.e. Dharma) through Transparency, accountability and truthful disclosure of state of affairs (i.e.Truth)
This is our own age old mantra of Good Governance.
Ladies and Gentlemen Companies that have won ICSI National Award for Excellence in Corporate Governance have
Consistently earned high returns, increased their net worth and enhanced their shareholders wealth
Invested significantly in proactive research and development
Developed people into ‘achievers’ than just ‘performers’
Dealt ethically with customers, government and business partners
Maintained and updated their professional management culture, system and processes
..and accomplished
Growing Investors Winning Employees Delighted Customers Trusted Suppliers Satisfied Government And Regulators Happy Society That is Excellence, which everyone aspires for and that leads to National Growth
