1. CORPORATE GOVERNANCE
By HUMSI SINGH

2. In this section we will get to know about the meaning corporate
governance.
Introduction
01
What is the scope and relevance of corporate governance in
today’s scenario would be discussed here.
Relevance of Corporate
Governance02
What are the general and specific issues involved would be
discussed here.
Issues in Corporate Governance
03
Why do every organisation should comply by the CG, would be
the matter of discussion.
04
Contents
Need, Importance and Benefits
of CG
05 Conclusion
Here we would go through a quick recap of what we have learnt.

3. Introduction
What is Corporate Governance?

4. Corporate
Governance
Corporate governance is the system of rules, practices, a
nd processes by which a firm is directed and
controlled. Corporate governance essentially involves
balancing the interests of a company's many stakeholder
s, such as shareholders, senior management
executives, customers, suppliers, financiers, the
government, and the community. Since corporate
governance also provides the framework for attaining a
company's objectives, it encompasses practically
every sphere of management, from action plans and
internal controls to performance measurement and
corporate disclosure.

5. Relevance of
Corporate
Governance

6. Scope of the Corporate Governance
Corporate governance has a broad scope. It includes both social and institutional aspects. Corpora
te governance is the system by which companies are directed and managed. It influences how t
he objectives of the company are set and achieved, how risk is monitored & assessed, & h
ow performance is optimized.
It is the system of principles, policies, procedures, and clearly defined responsibilities and account
abilities used by stakeholders to overcome the conflicts of interest inherent in the corporate firm.
Corporate governance ensures transparency which ensures strong and balanced economic develop
ment. This is also ensures that the interest of all shareholders (Majority as well as minority shareh
older) are safeguarded. It affects the operational risk and, hence, sustainability of a corporation
.
The quality of a corporation’s corporate governance affects the risks and value of the corporation.
Effective and strong corporate governance is essential for the efficient functioning of markets.

7. Relevance of Corporate Governance
Importance of Social Responsibility
Today, social responsibility is given a lot of
importance. The Board of Directors has to
protect the rights of the customers,
employees, shareholders, suppliers, local
communities, etc. This is possible only if
they use corporate governance
Takeovers and Mergers
Today, there are many takeovers and
mergers in the business world.
Corporate governance is required to
protect the interest of all the parties
during takeovers and mergers.
Changing Ownership Structure
Public financial institutions, mutual funds,
etc. are the single largest shareholder in
most of the large companies. So, they
have effective control on the management
of the companies. They force the manage
ment to use corporate governance.
Growing Number of Scams
Due to lack of corporate governance we
know that many scams, frauds and corrupt
practices have taken place. Misuse and mi
sappropriation of public money are
happening everyday.

8. Issues Involved in Corporate
Governance

9. Various Issues
There are a number of issues involved in Corporate Governance such as:
Internal Control
Correct Preparation
of Financial
Statements
Compensation of
CEO and Other
Directors
Nomination of
Board of Directors
The Board of Directors
should maintain a sound
system of internal control to
safeguard the investment of
shareholders and the assets
of the company, the board
should conduct a review of
the effectiveness of internal
controls.
The Board of Directors
should present a balanced
and understandable
assessment of the
company's position and
future prospects. There
should be a statement by
the auditors about their
reporting responsibilities.
There should be a formal
and transparent procedure
for developing policy on
executive remuneration for
CEO and other directors.
No director should be in a
position of deciding his or
her own remuneration.
Appointments to the Board
of Directors should be made
on merit. Adequate care
should be taken to ensure
that all the directors have
enough time available to
devote to the job. This
criterion is more important
in the case of chairman.

10. Importance and
Benefits

11. Importance of Corporate Governance
Careful management:- Corporate governance ensures the careful management of an organization
because there are various important decisions which could benefit any actor such as: shareholder,
directors, social welfare etc.
Stability of Stock Prices:- This stability is only possible with the help of good corporate governance
. Investors are always attracted towards well governed companies because such companies adopt
transparent governance policies and have better financial accountability and higher profit margins.
Training of Directors:- When the directors are selected they come up with different experiences,
expertise and qualifications.
Goodwill and Market Reputation:- Good Corporate Governance also develops the goodwill of
company over a period of time.
Improved Shareholder Communication:- Shareholders communication refers to the investors’
ability to vote their shares. It is the process by which individual investors could communicate with
the companies in which they invest. Corporate governance could be used as a tool for improving
the shareholders communication.

12. Benefits of Corporate Governance
Good corporate governance ensures corporate success and economic growth.
Strong corporate governance maintains investors’ confidence, as a result of which, company can
raise capital efficiently and effectively.
It lowers the capital cost and there is a positive impact on the share price.
It provides proper inducement to the owners as well as managers to achieve objectives that are
in interests of the shareholders and the organization.
Good corporate governance also minimizes wastages, corruption, risks and mismanagement and it
helps in brand formation and development.

13. Conclusion
Corporate Governance is important and essential at every step and time in an organisation. In modern corporations, the f
unctions/ tasks of owners and managers should be clearly defined, rather, harmonizing.
It deals with determining ways to take effective strategic decisions. It gives ultimate authority and complete responsibility
to the Board of Directors. In today’s market- oriented economy, the need for corporate governance arises. Also, efficiency
as well as globalization are significant factors urging corporate governance. Corporate Governance is essential to develop
added value to the stakeholders.

14. Thank you