1. DESIRABLE CODES FOR
COPORATE GOVERNANCE
GROUP V
1120237
1120238
1120239
1120240
1120241
1120242
1120243
1120244
1120245

2. WHAT IS CORPORATE GOVERNANCE?
 Corporate governance is a number of
processes, customs, policies, laws,
and institutions which have impact on
the way a company is controlled. An
important theme of corporate
governance is the nature and extent of
accountability of people in the
business, and mechanisms that try to
decrease the principal-agent problem.

3. PRINCIPLES OF CORPORATE
GOVERNANCE
 Rights and equitable treatment of
shareholders.
 Interests of other stakeholders.
 Role and responsibilities of the board.
 Integrity and ethical behaviour.
 Disclosure and transparency.

4. APPROACHES TOWARDS
GOOD CORPORATE
GOVERNANCE

5. THREE POSSIBLE
APPROACHES:
a) a prescriptive approach i.e. a rule-
based approach
b) a non-prescriptive approach i.e. a
principles-based approach
c) a balanced approach i.e. a hybrid of
principles and rules

6. • Rule-based framework is seldom
comprehensive or articulate enough to
address all existing or potential wrong
doings and improprieties
• It is imperative to sincerely believe in the
principles and concepts underlying good
corporate governance rather than viewing
it only as a set of rules
• Good corporate governance has to be
seen, believed and adopted more as a
philosophy of corporate life rather than an
imposition to flee from
• Good corporate governance is not so
much a matter of regulatory compliance
but is more an issue of constructive
change in the behavioral pattern.

7. IMPORTANT POLICY
MEASURES
• Risk management
• Human resource management including
preparation of a succession
plan
• Procurement of goods and services
• Marketing
• Determination of terms of credit and discount
to customers
• Write-off of bad/doubtful debts, advances and
receivables
• Acquisition/disposal of fixed assets
• Investment

8. MECHANISMS AND CONTROL

9. INTERNAL CORPORATE
GOVERNANCE CONTROLS
 Monitoring by the board of directors
 Internal control procedures and
internal auditors
 Balance of power
 Remuneration

10. EXTERNAL CONTROLS
 competition
 debt covenants
 demand for and assessment of
performance information (especially
financial statements)
 government regulations
 managerial labour market
 media pressure
 takeovers

11. 4 PILLARS OF GOOD
COPRPORATE GOVERNANCE
TRANSPARENCY
RESPONSIBILITY ACCOUNTABILITY
FAIRNESS

12. CASE STUDY
 In december 2008, Satyam announced
acquisition of two companies- Maytas
Properties and Maytas Infrastructure owned
by the family members of Satyam founder
and chairman Ramalinga Raju
 Due to adverse reaction from institutional
investors and the stock markets, the deal was
withdrawn within 12 hours
 Questions were raised on the corporate
governance practices of Satyam with
analysts and investors questioning the
company's board on the reasons for giving
consent for the acquisition as it was a related
party transaction.

13. Thank You!