If management is about running the business, corporate governance is about seeing that it is run properly. All companies need managing and governing.

1. Corporate Governance
Why and What
Anand Subramaniam

2. “There has been in recent years excessive
emphasis on a citizen's rights and
inadequate stress put upon his duties and
responsibilities.”
- Paxton Blair
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3. Highlights
 Corporate Governance – Overview
 Corporate Governance – Pillars
 Corporate Governance - Elements
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4. Corporate Governance - Overview

5. Why Corporate Governance?
 Better access to external finance
 Lower costs of capital – interest rates on loans
 Improved company performance – sustainability
 Higher firm valuation and share performance
 Reduced risk of corporate crisis and scandals
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6. Corporate Governance - Parties
Share- Manager
Directors
holders
Who use the
Guardians of Company’s
Those that own the Company’s assets
the company assets for the
Shareholders
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7. Corporate Governance vs. Management
Accountability
Accountability
and
and Corporate
Supervision Corporate
Supervision Governance
Governance
Strategic
Strategic
Management
Management
Executive Mgmt. Corporate
Executive Mgmt. Corporate
-Decision and Control- Management
- Decision and Control - Management
Operational Mgmt.
Operational Mgmt.
Source: Robert Tricker,Corporate Governance, 1984
Source: Robert I. Tricker, Corporate Governance, 1984
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8. Corporate Governance is NOT..
 Corporate governance ≠ corporate /
financial management
 Corporate governance ≠ corporate social
responsibility or business ethics
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9. What is Corporate Governance?
If management is about running
the business, corporate
governance is about seeing that
it is run properly.
All companies need managing
and governing.
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10. Corporate Governance - Pillars

11. Accountability
Fairness
Transparency
Corporate Governance - Pillars
Independence
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12. Accountability
 Ensure that management is accountable
to the Board
 Ensure that the Board is accountable to
shareholders
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13. Fairness
 Protect Shareholders rights
 Treat all shareholders including minorities,
equitably
 Provide effective redress for violations
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14. Transparency
 Ensure timely, accurate disclosure on all
material matters, including the financial
situation, performance, ownership and
corporate governance
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15. Independence
 Procedures and structures are in place so
as to minimise, or avoid completely
conflicts of interest
 Independent Directors and Advisers i.e.
free from the influence of others
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16. Corporate Governance - Elements

17. Corporate Governance - Elements
Well-
Good defined
Board share-
practices holder
rights
Control Board
Environ- Elements commit-
ment ment
Trans-
parent
P/E Ratio
disclo-
sure
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18. Good Board Practices
 Clearly defined roles and authorities
 Duties and responsibilities of Directors understood
 Board is well structured
 Appropriate composition and mix of skills
 Appropriate Board procedures
 Director Remuneration in line with best practice
 Board self-evaluation and training conducted
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19. Control Environment
 Internal control procedures  Independent audit committee
established
 Risk management framework
present  Internal Audit Function
 Disaster recovery systems in  Management Information
place systems established
 Media management  Compliance Function
techniques in use established
 Business continuity  Independent external auditor
procedures in place conducts audit
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20. Transparent Disclosure
 Financial Information disclosed
 Non-Financial Information disclosed
 Financials prepared according to International
Financial Reporting Standards (IFRS)
 Companies Registry filings up to date
 High-Quality annual report published
 Web-based disclosure
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21. Well-Defined Shareholder Rights
 Minority shareholder rights formalised
 Well-organised shareholder meetings conducted
 Policy on related party transactions
 Policy on extraordinary transactions
 Clearly defined and explicit dividend policy
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22. Board Commitment
 The Board discusses corporate governance issues and has created a
corporate governance committee
 The company has a corporate governance champion
 A corporate governance improvement plan has been created
 Appropriate resources are committed to corporate governance initiatives
 Policies and procedures have been formalised and distributed to relevant
staff
 A corporate governance code has been developed
 A code of ethics has been developed
 The company is recognised as a corporate governance leader
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23. “When a man says he approves of
something in principle, it means he hasn't
the slightest intention of carrying it out in
practice.”
- Otto von Bismarck
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24. Good Luck
http://www.linkedin.com/in/anandsubramaniam
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