corporate governance in india & sebi regulations

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Corporate Governance In India And SEBI Regulations Presented By: Atif Ghayas Aligarh Muslim University, Aligarh

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Page 1: Corporate Governance in India & SEBI Regulations

Corporate Governance In India And SEBI Regulations

Presented By:Atif Ghayas

Aligarh Muslim University, Aligarh

Page 2: Corporate Governance in India & SEBI Regulations

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Contents

Introduction Definition Key players Principles of Corporate Governance Objectives of Corporate Governance Corporate Governance in India Securities Exchange Board Of India Satyam Scandal Conclusion

Page 3: Corporate Governance in India & SEBI Regulations

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Introduction

The last few years have seen some major scams and corporate collapse across the globe.

In India, the major example is Satyam which is one of the largest IT companies in India.

All these events have caused the pendulum of public faith to shift away from free market to a more closely regulated one

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Definition

A system of law and sound approaches by which corporations are directed and controlled

Corporate governance are the policies, procedures and rules governing the relationships between the shareholders, directors and managers in a company, as defined by the applicable laws, the corporate charter, the company’s bylaws, and formal policies

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Key players in CG

Management

Board of Directors

Customers

Shareholders

Employees

Regulators

Suppliers

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Principles in CG

Rights and equitable treatment of shareholders

Interests of other stakeholders

Role and responsibilities of the board

Integrity and ethical behaviour

Disclosure and transparency

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Objectives of CG

Enhance the performance of companies

Enhance access to capital

Enhance long term prosperity

Provide barrier to corrupt dealings

Impacts on the society as a whole

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CG in India

The Indian corporate scenario was more or less stagnant till the early 90s.

The position and goals of the Indian corporate sector has changed a lot after the liberalization of 90s.

India’s economic reform programme made a steady progress in 1994.

India with its 20 million shareholders, is one of the largest emerging markets in terms of the market capitalization.

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Securities Exchange Board Of India

On April 12, 1988, SEBI was established with objective of protecting the rights of small investors and regulating and developing the stock markets in India.

In 1992, the Bombay Stock Exchange (BSE),the leading stock exchange in India, witnessed the first major scam masterminded by Harshad Mehta.

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Securities Exchange Board Of India

Analysts unanimously felt that if more powers had been given to SEBI, the scam would not have happened.

As a result the Government of India brought in a separate legislation by the name of ‘SEBI Act 1992’and conferred statutory powers to it.

Since then, SEBI had introduced several stock market reforms. These reforms significantly transformed the face of Indian Stock Markets

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Overstated assets and income

The results announced on October 17, 2009 overstated quarterly Revenues by percent and profits by 97 percent.

The global head of internal audit also illegally obtained loans for the company.

Created 13000 fake salary accounts

Created fake customer identities and generated fake invoices to inflate revenue

Satyam Scandal

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Satyam Scandal

The CEO was convinced that the gap in the balance sheets reached an unmanageable heights and could not be filled.

Satyam Computer crashed by Rs 139.15 or 77.69 per cent to close at Rs 39.95, after the Chairman`s confession

Bombay stock exchange fell 700 points

The Sensex recorded the biggest single-day loss in the past two months, after Satyam Computers Services, plunged 80 percent.

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Conclusion

Corporate governance And economic development are intrinsically linked.

Effective corporate governance systems promote the development of strong financial systems

Which, in turn, have an unmistakably positive effect on economic growth and poverty reduction.

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THANK YOU