1. CORPORATE
GOVERNANCE
PRESENTED BY:-
IQRA AFSAR
DISHA SATSANGI
D.PREM PREETHI
GARIMA CHANDRA

2. CONTENTS
CONTENTS
• What is Corporate governance ?
• Concept and objectives of Corporate governance
• Advantages and Disadvantages of Corporate governance
• Principles of Corporate governance
• Factors affecting Corporate governance

3. CORPORATE GOVERNANCE
Corporate Governance may be defined “as a
set of systems, processes and principles which
ensure that a company is governed in the best
interest of all stakeholders”. It is the system by
which companies are directed and controlled.
It is about promoting corporate fairness,
transparency and accountability.

4. CONCEPT
• It involves a set of relationships between a
company’s management, its board, its
shareholders and other stakeholders;
• It deals with prevention or mitigation of the
conflict of interests of stakeholders.Ways of
mitigating or preventing these conflicts of
interests include the
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.

5. OBJECTIVES

6. OBJECTIVES
• A properly structured board capable of taking
independent and objective decisions is in place at
the helm of affairs;
• The board is balance as regards the
representation of adequate number of non-
executive and independent directors who will
take care of their interests and well-being of all
the stakeholders;
• The board adopts transparent procedures and
practices and arrives at decisions on the strength
of adequate information;

7. OBJECTIVES
• The board has an effective machinery to
subserve the concerns of stakeholders.
• The board keeps the shareholders informed of
relevant developments impacting the
company;
• The board effectively and regularly monitors
the functioning of the management team;
• The board remains in effective control of the
affairs of the company at all times.

8. ADVANTAGES OF CORPORATE
GOVERNANCE
• Enhanced Performance- helps a company improve
overall performance.
 Without corporate governance, a company tends to be
weak and sluggish.
• Access to Capital- The better corporate governance a
company has, the more easily it can access outside
capital that the business can use to fund its projects.
 Since corporate governance includes major
shareholders, it connects investors with the business
itself, and these investors use their resources and
contacts to support the company monetarily.

9. • Better Standards- Corporate governance makes many
decisions about business operations, but one of the most
important decisions involves corporate standards.
 Standards affect the quality of products and the goals that the
business has in technology, customer service, and marketing.
• Better Talent Utilization- With a strong corporate
governance structure, people can find positions that
utilize their talents more effectively, and the board of
directors and top leaders of the business are always
looking to add more talented people to their numbers.

10. DISADVANTAGES OF CORPORATE
GOVERNANCE
• Easily Corruptible-Corporate governance needs a certain level of
government oversight to avoid increasing levels of corruption. The lack of
governmental oversight in corporate governance lead to a misallocation of
credit that actually worked against competition.
• Family-Owned Companies- Corporate governance works at its best
when shareholders and board members are able to make objective decisions that
are in the best interest of the company. According to Ibis Associates, a business
planning firm, family-run corporations (founding family members own controlling
share of the company), such as Ford and Wal Mart, lose objectivity in business
making decisions due to the family's financial investment in the business'
performance and the emotional ties associated with building a worldwide
corporation from the ground up.
• Costs of Monitoring- To effectively govern a publicly traded
corporation, shareholders must speak with one voice and have enough
votes to allow that voice to have any real weight. This requires individuals
that have a collective vision for the company to pour more money into
that company to gain a controlling share.

11. PRINCIPLES OF CORPORATE
GOVERNANCE
• Rights and equitable treatment of shareholders--
Organizations should respect the rights of shareholders and
help shareholders to exercise those rights. They can help
shareholders exercise their rights by openly and effectively
communicating information and by encouraging shareholders
to participate in general meetings.
• Interests of other stakeholders:- Organizations should
recognize that they have legal, contractual, social, and market
driven obligations to non-shareholder stakeholders, including
employees, investors, creditors, suppliers, local
communities, customers, and policy makers.

12. • Role and responsibilities of the board:-- The board needs sufficient
relevant skills and understanding to review and challenge management
performance. It also needs adequate size and appropriate levels of
independence and commitment
• Integrity and ethical behavior:- Integrity should be a fundamental
requirement in choosing corporate officers and board members.
Organizations should develop a code of conduct for their directors and
executives that promotes ethical and responsible decision making.
• Disclosure and transparency:- Organizations should clarify and make
publicly known the roles and responsibilities of board and
management to provide stakeholders with a level of accountability.
They should also implement procedures to independently verify and
safeguard the integrity of the company's financial reporting. Disclosure
of material matters concerning the organization should be timely and
balanced to ensure that all investors have access to clear, factual
information.

13. FACTORS AFFECTING
CORPORATE
GOVERNANCE:-

14. REGULATION AND THERE
ENFORCEMENT :-
• Since corporate governance failures have proved to be
harmful not just for the organizations but also for the
economy and the general public at large as well, there have
been public pressures on the government and regulatory
authorities to reform business practices and increase
transparency.
• Consequently, it has become a part of the government’s
duty to ensure accountability and responsibility in
corporate behavior.
• Effective disposal of this responsibility basically revolves
around two things:
• First, the designing of regulatory commands i.e. the
regulations and laws to ensure good corporate governance;
and
• Second is the enforcement of regulations.

15. RISK MANAGEMENT AND EFFECTIVE
GOVERNANCE:-
• In today’s world, frauds are an undeniable fact of business life.
• Affecting all types of businesses. New technologies such as the Internet, and
the development of fully automated accounting systems, have increased the
opportunities for fraud to be committed.
• Once suspected or discovered, investigating fraud is a specialist task
• requiring experience and technical skill and can be very costly. Thus, there is
no doubt
• that fraud is best prevented, rather than dealt with after the fact. The most
effective and appropriate response to the problem of fraud involves a
combination of risk management techniques.
These techniques include:
• Setting up inherent control based upon soft controls that occur continuously
and
• consistently throughout the organization. Such controls should be embedded
in
• normal business practice and be designed in such a way that they are to a large
• extent self sustaining; and
• Setting up formal control processes of monitoring, reviewing and reporting

16. WHY CORPORATE GOVERNANCE?:-
AT NATIONAL LEVEL :-
•As barriers to the free flow of capital fall, it becomes imperative to recognize that the
quality of corporate governance is relevant to capital formation and that sound
corporate governance principles is the foundation upon which the trust of investors is
built.
•Corporate governance represents the ethical the moral framework under which
business decisions are taken. Thus, any investor, when making investments across the
borders or even otherwise, wants to be sure that not only are the capital markets or
enterprises with which they are investing are being run competently but they also
have good corporate governance.
•Consequently, lack of sound corporate governance practices in any country
can badly affect the confidence of foreign investors, in turn causing damage to the
amount of foreign investments flowing in.

17. At the company and individual level:-
•It is self evident that sound corporate governance is essential to the well being of an
individual company and its stakeholders, particularly its shareholders and creditors.
•We need only remind ourselves of the many companies, across the world, whose
financial difficulties and,
•ultimate demise have been substantially attributable to weak corporate
governance.
•On the other hand, there are several areas of self-interest that should drive
companies to embrace more effective governance. These areas are:
1. Effective governance helps to minimize reputational risks and thus, protecting the
brand;
2. It helps to instill trust in customers and vendors;
3. It also helps to assure effectiveness and integrity of a company’s business
processes.
4. Further, in many cases, the punishment, in terms of penalties or imprisonment, for
white-collar crimes are now in excess for such criminal acts such as armed
robbery, assault, and negligent murder. Even to escape such punishments,
ensuring corporate governance compliance is a must.

18. •Most of the regulations made, such as SOX in US and Clause 49 of Listing Agreement
in India, are applicable only to publicly-registered or listed companies and private
companies are out of the ambit of these regulations.
• However, today we see that private companies are also becoming big in size and
impact.
•Very near examples would include joint ventures being organized as private
companies within the insurance industry in India.
•Thus, failure of corporate governance within these private companies as well can
very badly harm the general public at large. And also since new standards of
corporate governance, while only required by law at public companies, are for
forming “best practices” in many will governed private companies, we strongly feel
that the applicability of such regulations, after suitable modifications, be extended
to private companies as well.
•Apart from the necessity as above, it is also in the self-interest of private companies
to ensure good corporate governance. This is primarily because:-

19. 1. Usually, in most private companies, controls are informal or even if
there are formal controls, they tend to be detective rather than
preventive. This makes private companies unprotected against
risks, which needs to be mitigated.
2. Good corporate governance increases creditworthiness of the
company and thus, enables it to raise funds at cheaper cost. Good
corporate governance is also a must for companies that are planning
to seek stock exchange listing and raise money from markets by
converting them into public company.
3. Finally, if the owners of a private company are considering the sale
of all or part of the entity, or are seeking private equity
financing, effective controls can increase prospective buyers’
willingness to pay a premium for the acquisition.
Controls enhancements can also help attract new business partners.

20. Public sector corporate
governance:-
• Altough the private sector model view shareholders as main
stakeholders.
• In public sector specific users group those directly responsible for
funding and the community at large assume great importance as
stakeholders.
• Stewardship and accountibility of use of funds and assets is
particularly important in public sector.
• It is becoming more important to focus on corporate governance in
public sector to maintain faith in system and promote better service
to the public sector to maintain faith in the system and promote
better service to the public.

21. •Good institutional governance should be
instilled by the development of governance
systems in ministries and authorities, with
the aim of focusing on enhancing the quality
of public services consistent with citizen
expectations, promoting compliance and
conformance, with appropriate transparency
and flexibility.

22. CASE STUDY :
GLAXOSMITHKLINE
Do more,
feel better,
live longer

23. GLAXOSMITHKLINE
Type Public limited company
Traded as LSE: GSK
NYSE: GSK
Industry Pharmaceutical, biotechnology
Predecessor(s) Glaxo Wellcome
SmithKline Beecham
Founded 2000 (London)
Headquarters London, United Kingdom
Key people Chris Gent (Chairman)
Andrew Witty (Chief Executive)
Products Pharmaceuticals, vaccines, oral healthcare products, nutritional
products, over-the-counter medicines
Revenue £27.387 billion (2011)
Operating £8.397 billion (2011)
Income
Net Income £5.458 billion (2011)
Employees 96,500 (2010)[2]
Website www.gsk.com

24. GLAXOSMITHKLINE
They believe that it is in the vital financial interest of the firm to
conduct their business with honesty and integrity complying
all legal and regulatory requirements. The code applies to all
their employees worldwide.
Their code of conduct is as follows:
 All employees must conduct business with honesty and
integrity in a professional manner for the firm’s good
reputation.
 Employees must build relationships on the basis of trust and
treat all with respect and dignity. Their stakeholders like
customers, suppliers, employees must know the legal
requirements of business and company rules, policy and
procedures.
 Avoid any activity which could lead to unlawful practice and
harm the firm’s image.
 Avoid conflicts of interest within the firm in all transactions.
 Give accurate and reliable information in records submitted
while safeguarding the firm’s confidential information.

25. Employees are responsible for the following:
 All employees must uphold standards in the conduct of the firm’s
business. When in doubt the must ask the firm’s legal department.
 Senior Management should be the role model for others.
 Failure of the employees regarding compliance to the code would
lead to disciplinary action right up to severance from employment of
the firm.
 When in doubt the firm wants the employees to ask questions for
them.
 GlaxoSmithKline recognizes that commercial pressures and
complex regulatory environments can present employees with
difficult ethical situations.GSK provide guidance and support for the
backed by rigorous auditing and action if misconduct is identified.
 GSK has audit systems to help identify and deal with cases of non-
compliance. Those who violate company standards are subjected to
disciplinary action including dismissal in serious cases. Serious
violations and remedial actions are reported to the audit committee of
the board.
 Doing the right thing can, at times appear to sacrifice some
immediate advantage. However, GSK’s commitment to integrity and
high standards of business ethics benefit their
customers, communities, shareholders, employees and the business

26.  The company’s Code Of Conduct – An Introduction to Corporate
Ethics and Compliance promotes honest and ethical conduct by
setting out standards to be followed by GSK’s employees in their
everyday work for the company
 A separate publication, the Employee Guide to Business
Conduct, helps employees understand what the Code means in
practice and what is acceptable and unacceptable behavior.
 The Code is available on the company intranet.
 Employees have access to corporate compliance officers and are
encouraged to seek guidance or raise concerns with the officers directly.
Their contact details are in the Code Of Conduct brochure the
Employee Guide and on the company intranet.
 A secure off-site PO Box address is available for confidential written
communication, and toll-free telephone ‘GlaxoSmithKline Integrity Help
lines are available in the US and the UK.

27. CASE STUDY :

28. Type Public
NASDAQ: GOOG
Traded as NASDAQ-100 Component
S&P 500 Component
Industry Internet, Computer software
Menlo Park, California, U.S.
Founded
(September 4, 1998 (1998-09-04))[1][2]
Founder(s) Sergey Brin, Larry Page
Headquarters Mountain View, California, United States
Area served Worldwide
Larry Page
(Co-Founder & CEO)
Key people Eric Schmidt
(Executive Chairman)
Revenue US$ 37.905 billion (2011)
Operating income US$ 11.632 billion (2011)
Profit US$ 09.737 billion (2011)
Total assets US$ 72.574 billion (2011)
Total equity US$ 58.145 billion (2011)
Employees 33,077 (2012)[3]
AdMob, DoubleClick, On2 Technologies,
Subsidiaries

29. Corporate Governance Guidelines
 Google’s motto is ‘do not be evil’. They believe these words relate to the way they
serve their users.
 Their code message is that Google strives towards the highest possible standards
of ethical behaviour.
 Following are the seven principles they look at in arriving at their goal:

30. SERVING THEIR USERS
They have flourished by serving the interests of their users. Their goal is to build
products that organize the world’s information and make it available to their users.
Usefulness: products and services to be user friendly and useful to their
customers.
Honesty: they want clear and truthful communication with their customers.
Responsiveness: they want to be responsive to the user feedback about
their and services.
 Action oriented: they want their product and services to their customers to
be useful and in case they are not then, they take
appropriate action to make it useful

31. RESPECT FOR EACH OTHER AMONG
EMPLOYEES
 They create an ambience in which employee can reach to his
full, potential as follows:
 Employment provides equal opportunity to all employees, without any
discrimination.
 Harassment and discrimination is totally absent from the firm.
 Drugs and alcohol use is not accepted in the firm at all.
 Carrying of weapons and any type of violence by the employees is
strictly not accepted.

32. AVOIDANCE OF CONFLICT
OF INTEREST
 Avoidance of conflict of interest is achieved by the following methods:
 Openness and transparency is important to work ethics.
 Personnel investment in the firm’s equity is done only after the approval of the
board of directors.
 Gifts and entertainments are allowed to be accepted as long as these are of low
value and do not impact on the firm’s decisions with regard to those offerings
these gifts or entertainment.

33. PRESERVING
CONFIDENTIALITY
The confidential information could be any of the following:
 Financial information, product information and user information, the
information can be given in select cases on a need to know basis only.
 Trademarks, logos and copyrights. The name of Google products and services
and the logos connected to these are the firm’s intellectual property and
unauthorized use could damage their image.
 Google partners should not give or receive any confidential information unless
they have cleared with the firm’s legal department.
 Google wants to give the same respect to competitive information as they
expect their competitors would give theirs
 Google does not want its employees to even discuss confidential information
on the net or anywhere else, unless the person has been specially authorize to
do

34. BOOKS AND RECORD-KEEPING
 Google believes in accuracy in reporting the financial analysis of the firm.
Every member of the Google team has the responsibility of seeing that the
books are maintained accurately. No one should ever try to influence the
auditing of Google’s financial accounts.
 The employees are supposed to co operate with accounting and financial
teams; auditors to ensure that the book are accurately maintained.
 The employees must report any irregularities if they observe them, even the
small problems when they are not as per the firm’s reporting of Financial and
Accounting Concerns Policy.
GOOGLE ASSETS
 It is expected that the employees will take care to conserve the firm’s assets
and equipment. They are provided with all the required tools for the job they
perform.
 The firm’s computers, telephones and other communication equipments are
crucial aspects of the firm’s property and these must be looked after well.
 While buying from third parties the employees are to get the best bargains of
the firm. All contracts must be vetted by the firm’s legal department and
signed by only the authorized signatories.

35. LAWS
 The firm takes the responsibility of complying with the laws of the land and
when in doubt about the interpretation of any law the employees are to get in
touch with the firm’s legal department.
 The firm wants from its employee’s full compliance with the Foreign Corrupt
Practices Act, export control regulations, antitrust laws and other trade
regulation statutes. In case of accepting gifts, any item of value would be
considered as taking a bribe.
 Any violation of antitrust law by the employees would not be accepted.
CODE OF CONDUCT
 The firm believes that it is not possible to be fully comprehensive with regard
to the code of conduct: they want the employees to refer to the legal
department in case of any doubts in any matter of ethics.

36. CONCLUSION
 At last, it would be appropriate to say that firstly, there is no unique
structure of “corporate governance and secondly, corporate
governance goes far beyond regulation. The quantity,quality and
frequency of financial and managerial disclosure, the extent to which
the board of directors exercise their fiduciary responsibilities towards
shareholders, the quality of information that management share with
their boards and the commitment to run transparent companies cannot
be legislated at any level of detail. Instead, these evolve due to the
catalytic role played by the more progressive elements within the
corporate sector and, thus, enhance corporate transparency and
responsibility.The adoption of governance best practices increases the
likelihood that leadership will provide the desired corporate
performance while confidently trackingS