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Basicprovide of opraive govenance of the copay sectory law
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(company SECRETARYSHIP APPRENTICSSHIP TRAINEE) STUDENT REGISTRATION NO:
Cs SACHIN SONI & ASSOCIATES
As per the Company Secretaryship Regulations, 1981 an Apprenticeship Trainee is required to prepare a Project report in the Final Quarter of training period. The said project report should be prepared in consunation with the Company Secretary under whom he/she has trained. Keeping in view this requirement. I have prepared this project report in consultation with my Employer, CS Ajay Kumar under whom I have trained. The topic "Corporate Governance' chosen by me has had a significant impact in the current corporate scenario, especially after the changing policy of the Government of India which stresses upon preventing corporate collapses such as Enron. Polly Peck and the Maxwell companies. This project pnrnanly concerned with public listed companies i e. those listed on a Stock Exchange. The said Project has been prepared after referring various books on the topic and the Statutory Legislations enacted by the Parliament.
CONTENTS S. NO. PARTICULARS P. NO.
**1. INTRODUCTION 2-
Meaning & Definition of Corporate Governance Meaning: Corporate governance refers to the structures and processes for the direction and control of companies. Corporate governance concerns the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders. Good corporate governance contributes to sustainable economic development by enhancing the performance of companies and increasing their access to outside capital. A means whereby society can be sure that large corporations are well-run institutions to which investors and lenders can confidently commit their funds. It is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. The term can refer to internal factors defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as customer groups, clients and government regulations. Creates safeguards against corruption and mismanagement, while promoting fundamental values of a market economy in democratic society. Considering the ethical failures in the last several years and the resulting crisis in confidence...A sincere commitment to creating and sustaining an ethical business culture in public and private sectors (has never been so important). Definition: Definition of Corporate Governance has been given from time to time by the various authorities. As per ICSI: Corporate Governance is the best Management practices compliance of law in true letter and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders. Basic and summarized definition.
The above definition also reflects that a proper definition of corporate governance should not just describe directors’ obligations towards shareholders. Different countries have different ideas as to what constitutes good corporate governance. Therefore any satisfactory definition, to be applicable to a modern, global company, must synthesize best practice from the biggest economic powers into something which can be applied across all major countries. In essence we believe that good corporate governance consists of a system of structuring, operating and controlling a company such as to achieve the following: a culture based on a foundation of sound business ethics fulfilling the long-term strategic goal of the owners while taking into account the expectations of all the key stakeholders, and in particular: o consider and care for the interests of employees, past, present and future o work to maintain excellent relations with both customers and suppliers o take account of the needs of the environment and the local community Maintaining proper compliance with all the applicable legal and regulatory requirements under which the company is carrying out its activities. We believe that a well-run organization must be structured in such a way that all the above requirements are catered for and can be seen to be operating effectively by all the interest groups concerned. We develop this further in our section on best corporate governance practice. Here we have set out our assessment of how corporate governance is usually discussed and introduced our own, which we hope you have found useful. This page serves as a hub to link to a range of issues related to the definition of corporate governance. For example we define business ethics and Corporate Social Responsibility, different country models and Codes of Conduct.
Corporate governance are the policies, procedures and rules governing the relationships between the shareholders, (stakeholders), directors and managers in a company, as defined by the applicable laws, the corporate charter, the company’s bylaws, and formal policies. Primarily it is about managing top management, building in checks and balances to ensure that the senop’ior executives pursue strategies that are in accordance with the corporate mission. It consists of a set of processes, customs, policies, laws and institutions affecting the way of a corporation is directed, administered or controlled. Corporate governance governs the relationship among the many players involved (the stakeholders) and the goals for which the corporation is governed.
The three constituents of Corporate Governance are: Board of Directors or Board ; Shareholders ; and Management These can further be detailed as: Roles and powers of the Board Composition of Board Legislation Code of Conduct Board Independence Board Skills Roles and powers of Shareholders Board Appointments Board Meetings Board Induction and training Monitoring the Board Performance Management skills and environment Business and Community Obligations Audit Committee Financial and Operational Reporting
Year Name of Committee/Body Areas/Aspects Covered 1998 Confederation of Indian Industry (CII) Desirable Corporate Governance
Year Name of Committee/Body Areas/Aspects Covered 1992 Sir Adrian Cadbury Committee, UK Financial Aspects of Corporate Governance 1995 Greenbury Committee , UK Directors’ Remuneration 1998 Hampel Committee, UK Combine Code of Best Practices 1999 Blue Ribbon Committee, US Improving the Effectiveness of Corporate Audit Committees 1999 OECD & CACG Principles of Corporate Governance in Common wealth 2003 Derek Higgs Committee, UK Review of role of effectiveness of Non- executive Directors 2003 ASX Corporate Governance Council, Australia Principles of Good Corporate Governance and Best Practice Recommendations
An effective regulatory and legal framework is indispensable for the proper and sustained growth of the company. In rapidly changing national and global business environment, it has become necessary that regulation of corporate entities is in tune with the emerging economic trends, encourage good corporate governance and enable protection of the interests of the investors and other stakeholders. Further, due to continuous increase in the complexities of business operation, the forms of corporate organizations are constantly changing. As a result, there is a need for the law to take into account the requirements of different kinds of companies that may exist and seek to provide common principles to which all kinds of companies may refer while devising their corporate governance structure. The important legislations for regulating the entire corporate structure and for dealing with various aspects of governance in companies are Companies Act, 1956 and Companies Bill, 2004. These laws have been introduced and amended, from time to time, to bring more transparency and accountability in the provisions of corporate governance. That is, corporate laws have been simplified so that they are amenable to clear interpretation and provide a framework that would facilitate faster economic growth. Secondly, the Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India Act, 1992 and Depositories Act, 1996 have been introduced by Securities and Exchange Board of India (SEBI), with a view to protect the interests of investors in the securities markets as well as to maintain the standards of corporate governance in the country.
Companies Laws The Ministry of Corporate Affairs (MCA) is the main authority for regulating and promoting efficient, transparent and accountable form of corporate governance in the Indian corporate sector. It is constantly working towards improvement in the legislative framework and administrative set up, so as to enable easy incorporation and exit of the companies, as well as convenient compliance of regulations with transparency and accountability in corporate governance. It is primarily concerned with administration of the Companies Act, 1956 and related legislations.
1. The Companies Act, 1956 is the central legislation in India that empowers the Central Government to regulate the formation, financing, functioning and winding up of companies. It applies to whole of India and to all types of companies, whether registered under this Act or an earlier Act. It provides for the powers and responsibilities of the directors and managers, raising of capital, holding of company meetings, maintenance and audit of company accounts, powers of inspection, etc. The main objectives with which this Act has been introduced are to:- (i) help in the development of companies on healthy lines; (ii) maintain a minimum standard of good behaviour and business honesty in company promotion and management; (iii) protect the interests of the shareholders as well as the creditors; (iv) ensure fair and true disclosure of the affairs of companies in their annual published balance sheet and profit and loss accounts; (v) ensure proper standard of accounting and auditing; (vi) provide fair remuneration to management and Board of Directors as well as to company's employees; etc. The Companies Act, 1956 has elaborate provisions relating to the Governance of Companies, which deals with management and administration of companies. It contains special provisions with respect to the accounts and audit, directors’ remuneration, other financial and non- financial disclosures, corporate democracy, prevention of mismanagement, etc.
