corporate governance

PRESENTED BY:TAHA AHMAD GILL.HUZAIFA MUSHTAQ.

Corporate governance is a system by

which organization is directed & control by senior officers. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs.

CORPORATE GOVERNANCE

PARTIES IN CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

PILLARS

ACCOUNTIBILITY

Ensure that management is accountable to Board.

Ensure that Board is accountable to Shareholders.

Protect shareholder rights.

Everyone should be treated equally.

FAIRNESS

Ensure Timely, accurate disclosure

of Material's Matters.

Material matters: FINANCIAL SITUATION, OWNERSHIP & PERFORMANCE.

TRANSPERANCY

Who work for shareholders.

They are in organizations but not work for it.

Their interest is not Financial.

They look misconduct in organizations.

INDEPENDENCE

Good corporate governance can help

companies ensure efficient use of resources. To attract Investors. To recognize stakeholder interests. Less chances of Fraud. Corporate governance plays a vital role in

underpinning the integrity and efficiency of financial markets

IMPORTANCE OF CORPORATE GOVERNANCE

CONTINUED…

Poor corporate governance weakens a

company’s potential. Financial difficulties. High chances of fraud. Capital will flow.

POOR CORPORATE GOVERNANCE

The Cadbury Report, which shows

Aspects of Corporate Governance, is a report chaired by Adrian Cadbury that sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures.

CADBURY REPORT 1994 UK

Sir Adrian Cadbury chaired a committee

whose aims were to investigate the British corporate governance system and to suggest improvements restore investor confidence in the system. The Committee was set up in May 1991. The report embodied recommendations on corporate governance. The final report was released in December 1992 and then applied to listed companies reporting their accounts after 30th June 1993. And it was made public in 1994.

BACKGROUND OF CADBURY REPORT

CADBURY’S REPORT COMPANY:

AN ORGANIZATION NAMED “SATYAM COMPUTERS”

WHICH WAS AFFECTED BY POOR CORPORATE

GOVERNANCE .

Satyam computer ltd. Was

established on June 24 1987. The founder of organization was Mr. Ramalinga raj. CEO of that company at the time of scam was Mr. Rahul.

Satyam computers headquarters was in Hyderabad.

ABOUT SATYAM COMPUTERS LTD.

Satyam case was not an easy issue. It was involved in 14000 crore scam. SATYAM Scam had been a great example of

poor corporate governance. It had showed poor relation b/w

shareholders and employees. This company is an example for other

companies to avoid poor governance. Taking this scam as a role model, other

companies should implement good governance in order to set up rules and regulations.

SATYAM CASE

SATYAM announced acquisition with two

parties namely MAYTAS properties and INFRA company.

Due to adverse reaction from institutional investors this partnership collapse within 12 hours.

After the deal was aborted, Four of the directors resigned from the board of the company on the same day.

SATYAM SCAM DETAILS

Governance issue arises in SATYAM ltd.

Because of non fulfillment of obligations of a company to various stakeholders.

It shows poor relation between all stakeholders.

An organization is obligated to pay all taxes to government in time. But SATYAM didn’t pay their taxes to government.

DETAILS CONTINUED…

It is well known that shareholders has a right

to get all information from an organization. They have the right to be shown all financial.

In SATYAM case, the above obligations were never fulfilled, the acquisition between two companies were announced without consent of shareholders

THE SHAREHOLDERS WERE CHEATED!!!!

CONTINUED…

Bank Balance (Rs.5042 cr) Accrued Interest ( Rs. 376 cr) Liability (1230cr) Debtors (490 cr) Revenue (2700 cr)

Financial Statements of

Company.

NOTE:

THIS(SATYAM) COMPANY WAS BANNED FOR 8 YEARS

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