This is draft framework for Corporate Governance, which can be easily customized for any organization.

1. Corporate Governance
A draft framework
Conceived–Developed by:
PKS Management Consultants
Bangalore
Service Tax Regd. No. AYMPS8310HSD001

2. Index
• Corporate Governance Primer
• Our framework
• Approach

3. What is Governance
• The word derives from Greek
• Means to steer
• Was used for the first time by Plato

4. What is Corporate Governance
• A system by which corporations are directed
and controlled
• Focusing on the internal and external
corporate structures
• With the intention of monitoring the actions
of management and directors
• And thereby mitigating risks

5. Why Corporate Governance
• Corporate scandals of various forms
– Enron Corporation
– WorldCom
– Satyam

6. Stakeholders
• Internal stakeholders:
– Board of Directors
– Executives
– Other employees
• External stakeholder groups:
– Shareholders, debt holders,
trade creditors, suppliers,
customers
– Communities affected by the corporation’s
activities.

7. Genesis of Corporate Governance
• The Cadbury Report
• The OECD Principles of Corporate Governance
• The Sarbanes-Oxley Act
• The Cadbury and OECD reports present general
principals
• The Sarbanes-Oxley Act,
United States, legislation, based on
several of the principles in Cadbury
and OECD reports

8. 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

9. OECD Principles
• Auditing
• Board and management structure and process
• Corporate responsibility and compliance
• Financial transparency and information
disclosure
• Ownership structure and exercise of control
rights

10. Corporate Governance across world
• Different models of corporate governance
• The Anglo-American "model" tends to
emphasize the interests of shareholders.
• The Model associated with Continental
Europe and Japan also recognizes the interests
of workers, managers, suppliers,
customers, and the community

11. Corporate Governance in India
• SEBI Committee on Corporate
• Drawn from the Gandhian principle of
trusteeship
• And the Directive Principles of the Indian
Constitution

12. Codes and guidelines
• As a rule, compliance with these governance
recommendations is not mandated by law
• Although the codes linked to stock exchange
listing requirements may have a coercive
effect

13. Internal controls
• Monitoring by the board of directors
• Internal control procedures and internal
auditors
• Balance of power
• Remuneration
• Monitoring by large
shareholders/Banks /Creditors

14. External controls
• Competition
• Debt covenants
• Demand for and assessment of performance
information (especially financial statements)
• Government regulations
• Managerial labour market
• Media pressure
• Takeovers

15. Benefits of corporate governance
• Corporate success and economic growth
• Raises investor's confidence
• Helps in attaining operational excellence
• Enhances the brand image
• Winning with applause

16. Our Framework

17. Holistic
Conscience
Business Skills
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Growth
Principles of Corporate Governance
Continuous improvement from within

18. Description of our framework
• Three
interdependent and
interacting
components
Foundation
ImplementationResults

19. Foundation

20. Conscience
• Character / Honesty
/ Integrity and
above all, conscience
is THE Cornerstone
of corporate
governance
• From Chairman to
entry level employee

21. Business Skills
• Education ,
Experience,
Managerial &
Leadership Skills
• At all levels

22. Corporate Governance Principles
• Existing corporate
governance
principles to be
adopted
• And beyond

23. Continuous improvement from within
• Assimilate best
practices and work
on
• But ultimately you
are the competitor
for yourself

24. Implementation

25. Levels
• Internal
– Board
– Management
– Operations
• Stakeholders
– Customers
– Suppliers
– Financial institutions
– Govt.
– Society at large
• Contextual
– Industry specific

26. Objectives
• Develop suitable
objectives
corresponding to each
level

27. Processes
• Develop suitable
processes and systems
corresponding to
objective

28. Execution
• Execute the processes
and systems

29. Compliance
• Put in place compliance
structure for each level

30. Results

31. • Holistic Growth

32. Approach

33. Problem solving approach

34. • Corporate governance
flows from top to down

35. Define the level
• Work out the levels at
which corporate
governance need to be
implemented in phases
Board
Management
Operations

36. Phases
• At each level define the
processes, SLAs and
compliance

37. Level of automation
• Define the level of
automation

38. Example for department
• Each department
interacts with other
departments
• And other External
stakeholders and
agencies
Stakeholders
Agencies
External

39. Getting the correct picture
• Department has
internal view and
external view
• Both combined
together forms the
reality of the
department
Internal view
External view
Reality

40. Internal view
• Department should
make a list of all
activities and
corresponding process
flow and gaps
• After internal
deliberations, gaps
need to be filled
• Here internal view is up-
to-date

41. External view
• Departments /
stakeholders interacting
with the department
should follow the same
process and suggest the
measures to fill-in the
gaps.
• It completes the
external view

42. Mix
• The individual
department works on
both internal and
external views and
updates its processes.

43. General pointers
• Adopt the best practices available at National /
International levels
• Culture of the company is interlinked with corporate
governance

44. Corporate governance.. not a milestone
•it is a
continuous
process

45. An artefact of
PKS Management Consultants
+91 – 97411 94285
# 9, Site No. 14/15 B, 1st Vivekanda Layout
Outer Ring Road, Marathalli
Bangalore -560037
pramod@pksmanagementconsultants.com
www.pksmanagementconsultants.com
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46. Thanks!!