study mtls-cc . cg

8/7/2019 Study Mtls-CC . CG

http://slidepdf.com/reader/full/study-mtls-cc-cg 1/24

Certificate Course

In

CORPORATE GOVERNANCE

Study Materials

Index

I. Introduction

II. Ownership vs. Management.

III. Principles of Good Governance.

IV. Ethics in Governance

V. Corporate Governance

VI. Parties to Corporate Governance.

VII. Board of Directors

VIII. Audit Committee.

IX. Disclosures

X. Company law Provisions-

Corporate Governance

XI. Recent Developments in Corporate Governance in India

XII. Case Study

XIII. Conclusion

1



Certificate Course in Corporate Governance

Study Materials

I. Introduction

Business of selling goods and services has always beencarried on in different business forms in the society.The change in the form of business from Sole Trader toPartner-ships and Partner-ships to Limited companies was basically necessary to meet the need for increasinginvestment to meet the growth prospects of the business. The expansion of the business had alsoresulted in ownership of the business moving away from the Business Management. As the size of the business started increasing, the need to look after business in a serious way was felt very much. Along with this, the need for experienced persons handling

the management of the business was also felt. Slowly,over a period of time the management of businessstarted getting into the hands of experienced orspecially qualified hands in the respective fields. Themore severe the competition in the business became,the more and more specialised persons started gettingemployed to run business and such people have not been having any ownership stake in such business.

II. Ownership vs. Management.

With employment of specialised persons to look afterrunning the business, the Owners’ interest in the business was mainly restricted to investing money toreap returns. As the owners/investors are mostly persons with sufficient resources, they were happy toleave the task of running the business in the hands of competent and experienced persons, willing to manage

2



the business for a suitable remuneration. The managershave been given required freedom to run the businessthey deem fit and had to be accountable for theiractions to the owners of the business. TheManagement’s view of the business will be to runsuccessful business under competition and earn areasonable return for the owners in the long range.

The relationship between the Managers and the Owners isdefined by the following factors:

1. Powers: Managers need power to run business and theowners have to delegate powers to Managers to theextent required for successful running of business. Thismeans that owners should trust and delegate sufficient

powers to managers–sufficient enough to allow themanagers to perform well using their expertise inrunning the business. The delegation of powers should be clearly expressed to managers and others in theorganisation, so that managers are truly empoweredand can be accepted as leaders by others.

2. Accountability- The delegation of powers comes withaccountability. The managers are accountable to theowners for the results. They managers have obligation

to owners to use the powers delegated to them andachieve good working results for the benefit of theowners. They have to ensure that investors’ wealthgrows due to their efforts and the business follows allthe legal procedures and investors’ interests are wellprotected.

3. Remuneration- The managers have to be paidremuneration to match with the powers delegated andtasks assigned to them. If remuneration does notcommensurate with the tasks assigned to managers,there will be no motivation for the managers to perform well. Remuneration, should match the position, powersdelegated and tasks assigned to Managers.

4. Reports- Reporting is an important part of the managers’responsibilities. Not only doing the job, but informingthe concerned about what is being done is equally

3



important. Other wise, the owners will be ignorantabout their position, either relating to the status of theirinvestment or the protection of their business. TheReporting covering all important aspects of businessshould be done in a systematic manner and with a fixedperiodicity.

III. Principles of Good Governance.

Governance is the activity of governing. It relates to taking

decisions that meet and define expectations, granting power, or

verifying actual performance against the expectations. It consists

either of a separate process or of a specific part

of management or leadership processes. Sometimes people set up

a governing authority to administer these processes and systems.

In the case of business organisations, governance relates toconducting consistent management of the organisation, lying down or

defining cohesive policies, processes and decisions-rights for a given

area of responsibility. For example, managing at a corporate level

might involve evolving policies on privacy, on internal investment,

and on the use of data.

Perhaps the moral and natural purpose of governance consists of

assuring, on behalf of those governed, a worthy pattern of good

behavior, while avoiding an undesirable pattern of bad. The idealpurpose, obviously, would assure a perfect pattern of good with no

bad behavior.

In business, people who are trusted with the function of Governance,

should exhibit that they have ability to govern the affairs of the

organisation in a good manner. Unless the Governance is good, the

4



working result can never show the desired results to the owners and

owners will have no trust and confidence in those governing the

organisation.

Key elements of good governance principles include

a. Honesty,

b. Trust and integrity,

c. Openness/ Transparency,

d. Performance orientation,

e. Responsibility and accountability,

f. Mutual respect between the owners and Managers, and

commitment to causes of the organisation.It is a matter of great importance to know as to how directors and

management develop a model of governance that aligns the values of

the business participants and then evaluate this model periodically

for its effectiveness.

In particular, senior executives should conduct themselves honestly

and ethically, especially concerning actual or apparent conflicts of

interest, and disclosure in financial reports.

IV. Ethics in Governance

By virtue of existing in the social and natural environment, business

is duty bound to be accountable to the natural and social environment

in which it survives. Irrespective of the demands and pressures uponit, business by virtue of its existence is bound to be ethical, for at least

two reasons, because:

1. Whatever the business does affects its stakeholders, and

5



2. Every juncture of action, has side effects of ethical as well as

unethical behavior wherein the existence of the business is justified

by ethical behavior, it responsibly chooses.

One of the conditions that brought business ethics to the forefront is

the withdrawal of small scale, high trust and face-to-face enterprises

and emergence of huge multinational corporate structures capable of

drastically affecting everyday lives of the masses.

Good governance implies of conducting business with business ethics.

Stanley Krolick identifies four individual ethical decision-making

styles.

The first style is the Individualist and this decision maker is driven by

natural reason, personal survival, and preservation. The self is the

only criteria involved in decisions for this style while ignoring other

stakeholders.

The second style is Altruists who are primarily concerned for others.

This approach is almost opposite to that of the Individualist. Altruists will disregard their own personal security for the benefit of others.

The primary mission of Altruists is to generate the greatest amount of

good for the largest number of people.

The third style is Pragmatists who are concerned with current

situations and not with the self or others. It is facts and the current

situation that guide this decision maker’s decision.

The fourth and final style is the Idealist who is driven by principles

and rules. It is values and rules of conduct that determine the behaviors exhibited by Idealists. Idealists display high moral

standards and tend to be rigid in their approach to ethical situations.

The different types of Governance may be noted as given below:

6



1. Global governance

2. Corporate governance

3. Project governance

4. Information Technology Governance

5. Participatory Governance

6. Non-Profit Governance

7. Islamic Governance

V. Corporate Governance

Corporate governance consists of the set of processes, customs,

policies, laws and institutions affecting the way people direct

administer or control a corporate.

Corporate governance also includes the relationships among the

many players involved -the stakeholders and the corporate goals. The

principal players include the shareholders, management, and

the board of directors. Other stakeholders include employees,

suppliers, customers, banks and other lenders, regulators, the

environment and the community at large.

Gabrielle O'Donovan defines corporate governance as 'an internal

system encompassing policies, processes and people, which serves the

needs of shareholders and other stakeholders, by directing and

controlling management activities with good business savvy,

objectivity, accountability and integrity.

Report of SEBI committee (India) on Corporate Governance defines

corporate governance as the acceptance by management of the

inalienable rights of shareholders as the true owners of the

7



corporation and of their own role as trustees on behalf of the

shareholders.

Hence Corporate Governance can be understood as a system of

structuring, operating and controlling a company with a view to

achieve long term strategic goals to satisfy shareholders, creditors,

employees, customers and suppliers, and complying with the legal

and regulatory requirements, apart from meeting environmental and

local community needs.

A Healthy Corporate Governance assures to take care of interests of

different stakeholders, which ultimately results in a strengthened

economy, and hence good corporate governance is a tool for socio-

economic development.

Commonly accepted principles of corporate governance include:

1. 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 effectively communicating information that is

understandable and accessible and encouraging shareholders to

participate in general meetings.

2. Interests of other stakeholders:

Organizations should recognize that they have legal and other

obligations to all legitimate stakeholders.

3. Role and responsibilities of the board:

The board needs a range of skills and understanding to be able to deal

with various business issues and have the ability to review and

challenge management performance. It needs to be of sufficient size

and have an appropriate level of commitment to fulfill its

8



responsibilities and duties. There are issues about the appropriate

mix of executive and non-executive directors.

4. Integrity and ethical behavior:

Ethical and responsible decision making is not only important for

public relations, but it is also a necessary element in risk management

and avoiding lawsuits. Organizations should develop a code of

conduct for their directors and executives that promotes ethical and

responsible decision making. It is important to understand, though,

that reliance by a company on the integrity and ethics of individuals is

bound to eventual failure. Because of this, many organizations

establish Compliance and Ethics Programs to minimize the risk that

the firm steps outside of ethical and legal boundaries.

5. Disclosure and transparency : Organizations should clarify

and make publicly known the roles and responsibilities of board andmanagement to provide shareholders 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

made known in time and in a balanced way to ensure that all

investors have access to clear, factual information.

Issues involving corporate governance principles include:

1. Internal Checks and Controls.

2. Internal audit.

3. External audit or Statutory Audit.

9



employees, creditors or customers; they may act on their own or in

collusion with other including insiders. Regular review and revision

of the internal checks and controls, where ever found necessary is a

part of the Company managements function.

2. Internal Audit

Internal Auditing profession has since changed significantly in the

recent times starting from a “watchdog” function, to a prominent role

in the essential domain and component of corporate governance.

Internal audit function when carried out by an outside agency will

assure the stake holders about genuine concern of the management inensuring transparency of operations of the Organisation.

Internal Audit reporting directly to Board of Directors will ensure

impartial reporting about weak points in the Systems and procedures

and also about inefficient working of the employees in operations ,

causing losses to the Organisation. Internal auditing should be

considered as important subsets of corporate governance.

In the last decade, following repeated financial scandals, together

with the development and widespread perception of risk as anintegral aspect of corporate governance, the concept of internal Audit

has become central to various Corporate Governance Codes, and the

intervention of the internal audit function is explicitly recommended.

As a consequence, these events have raised the importance of internal

audit as a key component of good corporate governance practices.

Non interference of executives in the appointment of Internal

Auditors and conduct of Internal Audit and timely, submission of

replies to points raised by the internal auditors in their reports,indicate healthy state of affairs of Corporate Governance.

3. External Audit.

11



The independence of External Auditors, in conducting audit of

accounts of the organisation and reporting on the affairs of the

corporate will assure stakeholder about effective conducting of

business operations by the management.

The external Auditors will be required to not only comment on the

accuracy of recording and presenting the financial data, but also on

the compliance to various statutory regulations relating running of

companies as applicable to the client’s company-such as Accounting

standards, energy conservation, pollution control measures etc.

The external auditors by, concentrating on verifying and reporting on

the legal and statutory compliances in addition to verifying the

accuracy of accounting data, will provide sufficient information to

stakeholders, since in most of the countries, the law has coveredgovernance provisions as a part of Audit Programs, which have to be

verified and reported up on by the statutory auditors. The Annual

Report to shareholders will contain, report of the Auditors in addition

to the report of the board of directors to the shareholders. In this

report External Auditors will express their comments on Accounts of

the completed period and other related matters. This report will give

much of the information, needed by the shareholders, on Corporate

Governance.The External Auditors should be competent and experienced and

independent in their examination of data available. They should be

unbiased and impartial in their approach and reporting.

4. Management of Risk.

Business involves risks. The risk and returns are directly

proportional. Risks should be properly identified, assessed and

addressed to restrict, the adverse effects of such risks on business.

Shareholders have to be informed about the possible risks in theoperations and how the management is assessing the risks and

managing such risks by taking steps to measures the risks, share the

risks and contain the risks in the business. As owners, they should not

only know as what major risks are being faced by business and also

how these risks will affect the earning capacity of their investment as

12



well as how the management is planning to mitigate the adverse

effects of these risky activities. As a part of regular review and

information to shareholders, company may post in its annual report,

comments such as”

“The Board regularly discusses the significant business risks identified by the managementand the mitigation process being taken up.A detailed note on the risk identification and mitigation is included in Management Discussionand Analysis annexed to the Directors Report.”

5. Managerial Remuneration.

This is one of the sensitive areas, in the management of the company

affairs, the shareholders should be informed. Unless, the market price

is paid, the competent and best persons will not be available to

manage the affairs of the company. If remuneration is not goodenough, company can not attract and retain the competent persons to

manage the affairs of the company. But at the same time, the mangers

should be held responsible for achieving the targets fixed for the

company- accountability should be fixed on them for performance.

The remuneration of the senior persons, is fixed and approved by the

Shareholders, or at least ratified, based on the recommendations of

the Board of Directors. Many times the senior most executive in a

company is offered a percentage of the profits payable as part of theremuneration and some times company’s stock is also offered as a

part of the remuneration package, in order to motivate them for

improvement in performance. Offering stock options (EOS) to

employee as followed elsewhere is now becoming a regular feature in

Indian Companies.

6. Dividend Policy.

Dividend is the return paid to the owners of the company-

Shareholders on the amount invested in the business. This dividend

may be paid, when the company earns profit. But at the same time,

13



paying dividend to shareholders means outflow of Cash from

Business operations. Cash outflow represents lower liquidity in

business. Hence how much dividend to be paid to shareholders has to

be decided very carefully and companies generally formulate a

dividend policy to ensure transparency to shareholders andrecommendation for paying dividend will be made by Board but has

to be approved by the shareholders themselves.

Hence we can understand that a Dividend Policy is a Policy used by

companies to decide as to how much dividend should be paid to

Shareholders.

VI. Parties to Corporate Governance.

Parties involved in corporate governance include people who regulate

the operations of the organisation like Director, Executive Director,

Managing Director, Chief Executive Officer, Board of Directors,

Corporate Management Team, Shareholders and Auditors.

Other stakeholders who help in running the organisation include

suppliers, employees, creditors, customers and the community at

large.

All parties to corporate governance have an interest, whether direct or

indirect, in the effective performance of the organization. Directors,

workers and management receive salaries, benefits and reputation, while shareholders receive capital return. Customers receive goods

and services; suppliers receive compensation for their goods or

services. In return these individuals provide value in the form of

natural, human, social and other forms of capital.

Let us Study the role of above in the corporate governance.

14



A Director is a person who directs the operations of the corporate. A

Director is a representative of the owners or stake holders, who are

interested in ensuring that organisation operates in systematic

fashion and protects the interests of the owners and stake holders.

Board of Directors is a collective group of Directors.

Directors must be individuals.

Directors can be owners, managers, or any other individual elected by

the owners of the business entity.

Directors who manage the operations are Called Managing

Directors.

Executive Director executes the instructions of Managing Director

and / or Board of Director and is involved in running the day to day affairs of the company.

The lenders also may nominate their representatives also as Directors

to guide and watch the performance of the borrower company. They

are known as Nominee Directors. Company may also request some

experienced and eminent persons to accept directorship of the

company and make available their expertise to guide and monitor the

performance of the company. Similarly persons acting as directors

who are not owners or managers are sometimes referred to as outsidedirectors, outsiders, disinterested directors, independent directors, or

non-executive directors.

Generally in most of the companies, the persons investing majority of

the equity nominate themselves or their representatives to the

position of Managing Director.

Chief Executive Officer is a person who is in charge of operations of an organisation. He heads the Corporate Management Team.

Corporate Management Team consists of Heads of major Functional

Areas and is involved in preparing and executing Strategic

Management initiatives to ensure that the organisation improves its

performance and achieves the set targets.

15



VII. Board of Directors

As already indicated Board of Directors is a collective group of

Directors.Board of Directors is the supreme body guiding the company in

performing and achieving the targets. It would be given access to all

the resources available with the company. However, certain

important matters may have to be brought before the shareholders-

like huge borrowings, changing the objects of the company and

appointment of Directors etc. Role of the Board of Directors with

reference to shareholders can be compared to that of the Guardian in

case of minors. They act like Trustees on behalf of shareholders.The articles of association of the company indicate the procedure for

functioning of Board of Directors.

Other details regarding procedures for election of directors to the

Board, conducting/holding meetings of Board of Directors are also

indicated in the Articles of Association of the Company.

Typical major duties of boards of directors include

1. Governing the organization by establishing broad policies andobjectives in line with Vision and Mission Statements of the

company;

2. Selecting, appointing, supporting and reviewing the performance

of the chief executive;

3. Ensuring the availability of adequate financial resources to the

company;

4. Approving Business Plans and Annual budgets of the company;

5. Accounting to the stakeholders for the organization's performance.

16



Hence a subcommittee of directors known as Audit Committee is

formed to take more active role in Company affairs than Board of

Directors. The responsibilities of such subcommittee called as Audit

Committee typically include:

1. Reviewing and Overseeing the financial performance and

reporting the same along with proper disclosures in annual

reports.

2. Monitoring choice of accounting policies and principles,

checking adequacy of Internal controls and fixing the terms of

reference to internal auditors. It will also be involved in

reviewing the finding and reports of Internal auditors and

discussions with Statutory auditors

3. Overseeing hiring, performance and independence of the

external auditors.

4. Overseeing of regulatory compliance, ethics, and whistleblower

hotlines.

5. Discussing risk management policies and practices with

management.

This Audit Committee will have power to Investigate any matter

within the purview its terms of reference and seek information fromany employee or obtain outside legal or professional expert advice inthe concerned subjects.

IX. Disclosures

Business involves risks and in the day to day management, many important issues involving risks will come up for decisions. By virtueof delegated powers, certain decisions involving such risks will be

taken by management. The Management of business as a part of good business ethics must maintain transparency in conductingmanagement by disclosing all material facts to the owners of the

business. Otherwise the owners will not be aware of the risks beingfaced by the organisation in which, they have invested and suchinvestment is exposed to what types of risks. Hence disclosure is animportant aspect of discharging the duties of trusteeship. If certain

18

http://en.wikipedia.org/wiki/Risk_management

http://en.wikipedia.org/wiki/Risk_management



information is important to an investor or lender using the financialstatements, that information should be disclosed within thestatement or in the notes to the statement. It is because of this basicaccounting principle that numerous pages of "footnotes" are oftenattached to financial statements.

As an example, let's say a company is named in a lawsuit thatdemands a significant amount of money. When the financialstatements are prepared it is not clear whether the company will beable to defend itself or whether it might lose the lawsuit. As a result of these conditions and because of the full disclosure principle thelawsuit will be described in the notes to the financial statements.

A company usually lists its significant accounting policies as the foot

note to its financial statements. Non disclosure will amount todenying right of information to the stakeholders.

X. Company law provisions & Corporate Governance.

Indian Companies ACT a956 and subsequent amendments containmany provisions covering the requirements of Corporate Governance.

As already indicated the Articles of Association (AoA) of a company

indicate the various corporate governance procedures. Those

companies, which do not want to prepare separate Articles of

Association can adopt the model AoA as given in Companies Act.

The Contents of model Articles of Association in case of a Private

Company limited by Shares is as given in Annexure I.

From this it can be seen that the articles cover-Directors’ Powers and

Responsibilities, Decision making by Directors, Appointment of

Directors, Shares and Distribution(about allotment of shares,

payment of dividends and capitalisation of profits), Decision making

by Shareholders and Administrative arrangements.

19



The Contents of model Articles of Association in case of a Public

Company limited by Shares is as given in Annexure II.

Other provisions include certain sections available in Companies Act1956, covering

1. Disclosures on Remuneration of Directors: Section 299 of the Act requires every director of a company to make disclosure, atthe Board meeting, of the nature of his concern or interest in acontract or arrangement (present or proposed) entered by or on

behalf of the company.The company is also required to record such transactions in theRegister of Contract under section 301 of the Act.

2. Requirements of the Audit Committee: Audit Committeehas a critical role to play in ensuring the integrity of financialmanagement of the company. The existence of this Committee givesassurance to the shareholders that the auditors, who act on their

behalf, are in a position to safeguard their interests.Besides the requirements of Clause 49, section 292A of the Actrequires every public having paid up capital of Rs 5 crores or moreshall constitute a committee of the board to be known as Audit

Committee. As per the Act, the committee shall consist of at leastthree directors; two-third of the total strength shall be directors otherthan managing or whole time directors. The Annual Report of thecompany shall disclose the composition of the Audit Committee.

The recommendations of the committee on any matter relating tofinancial management including Audit Report, shall be binding on the

board. In case board does not accept the recommendations so made,the committee shall record the reasons thereof, which should becommunicated to the shareholders, probably through the Corporate

Governance Report.The committee shall act in accordance with the terms of reference to

be specified in writing by the board. The committee should haveperiodic discussions with the auditors about the Internal ControlSystems and the scope of audit including the observations of theauditors. If the default is made in complying with the said provisionof the Act, then the company and every officer in default shall be

20



punishable with imprisonment for a term extending to a year or withfine up to Rs 50000 or both.

Director’s remuneration: The specific disclosures on theremuneration of directors regarding all elements of remunerationpackage of all the directors should be made as a part of CorporateGovernance.Section 309(1) of the Act requires that the remuneration payable bothto the executive as well as non-executive directors is required to bedetermined by the board in accordance with and subject to theprovisions of section 198 either by the articles of the company or by resolution or if the articles so require, by a special resolution, passed

by the company in a general meeting.Further, Schedule VI of the Act requires disclosure of Director’s

remuneration and computation of net profits for that purpose.

Corporate Democracy: Wider participation by the shareholdersin the decision making process is a pre-condition for democratizingcorporate bodies. Due to geographical distance or other practicalproblems, a substantially large number of shareholders cannot attendthe general meetings. To overcome these obstacles and pave way forintroduction of real corporate democracy, section 192A of the Actand the Companies (Passing of Resolution by Postal Ballot),

Rules provides for certain resolutions to be approved and passed by the shareholders through postal ballots.

XI. Recent Developments in Corporate Governance In

India

Confederation of Indian Industries (CII) has set up A National task Force with Mr. Rahul Bajaj, past president of CII and Chairman andManaging Director of Bajaj Auto ltd, as the Chairman and includedmembers from industry, the legal profession, media.This Task Force made an in depth study on the matters relating toCorporate Governance by Indian Corporates and issued a set of Guidelines outlining the desirable Procedures of CorporateGovernance, in Apr 1998. CII has recommended this Code to Indian

21



business and industry, for understanding and implementation. A copy of the Guide-lines issued by CII is given in Annexure III.

It can be seen from these Guide lines that suggestions have beenmade about inclusion of Independent Directors on the Board of Directors and restricting the number of directorships to be held by anIndividual to function effectively in managing the companies.The Guide lines suggest that those directors who are not attending,even 50 % of meetings of Board of Directors should not be consideredfor re- appointment.Similarly, they also recommend establishing Audit Committeescomprising of Directors of the Board. The guidelines regardingfunctioning of Audit Committees have also been indicated. Thematters to be placed before Board have also been indicated so that all

important activities of the company are surely reviewed and revised by Board, where ever required.

The Guidelines also covered as to what are the desirable disclosures(both financial and non-financial) and certain guidelines to protectthe rights of the Creditors of the companies as well.Many of these guidelines have since become part of Companies Actand corporate Governance practices of leading companies in India.

Many such efforts have been made to update the corporateGovernance practices in India after this, like Kumara Mangalam Birlacommittee Constituted by SEBI in 1999 and SEBI’s acceptance of those recommendations of this committee by amending Clause no 49,of listing Agreement. Latest effort being setting of Expert Committeeunder the chairmanship of Dr. JJ Irani based on recommendations of

which the GOI has brought out the Corporate Governance guidelinesand The Companies Bill 2009.

GOI CG Guidelines 2009Ministry of Company Affairs Government of India has issued duringDec 2009 as a part of “India Corporate Week” celebrations a set of ‘Voluntary guidelines’ to be followed by Indian Companies. Theserecommendations have been meant to be followed by IndianCorporates Voluntarily and some of the guidelines will become part of

22



Indian Companies Act, once approved by Parliament. A copy of the Voluntary guide lines issued is attached .Annexure IV.

XII. Case Study

The Corporate Governance Report of one of the leading CorporatesGiants of India –M/s. ITC Ltd for the year ending Mar31, 2010 isattached here with for your reference and detailed study- Annexure V.

XIII. Conclusion

Nevertheless "corporate governance," despite some feeble attempts

from various quarters, remains an ambiguous and often

misunderstood phrase. For quite some time it was confined only to

corporate management. That is not so. It is something much broader,

for it must include a fair, efficient and transparent administration and

strive to meet certain well defined, written objectives of the

Corporates.

Corporate governance must go well beyond law. The quantity, quality

and frequency of financial and managerial disclosure, the degree and

extent to which the board of Director (BOD) exercise their

trustee responsibilities (largely an ethical commitment), and the

commitment to run a transparent organization- these should be

constantly evolving due to interplay of many factors and the roles

played by the more progressive/responsible elements within the

corporate sector. John G. Smale, a former member of the General

Motors board of directors, wrote: "The Board is responsible for the

successful perpetuation of the corporation. That responsibility cannot be relegated to management." The Interest of even a smallest

investor should be protected and those in position of power should

conduct business and inform the concerned to this extent. This effort

must go to the extent of ensuring that corporation should cease to

exist if that is in the best interests of its stakeholders.

23



Prof. JR KumarFaculty Director

FAPCCI,HYD.

study mtls-cc . cg

Documents