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Slide 1
Prof. Suman K Mukerjee Principal and Dean Bharatiya Vidya
Bhavan Instt. of Management Science
Slide 2
Administrative Responsibilities What you see depends on where
you sit The Modern Society is a society of Different Organisations.
There is need for comprehensive freedom in order to function
properly Use freedom in the right way. Ensuring Company Law and
Articles of Association. Personal liability Default - knowing or
deliberate
Slide 3
Keep thy shop and shop will keep thee- George Chapman
Corporations are not only business enterprises, they shape values
of our society Understand clearly the rights, roles,
responsibilities and accountability. Optimise business performance
Ensure continuous disclosure of material information financial
& non-financial
Slide 4
Management implies joy for living - take work as joy Good CG
will improve market capitalisation of Indian companies, thereby
reducing cost of capital Large number of retail investors with
limited knowledge requiring stringent investor protection. Public
holdings are widely dispersed so that shareholders have little
power on their own.
Slide 5
From functional to cross sectional to holistic Holistic GDP =
Economic GDP + Social GDP(HDI) + Psycho spiritual GDP ; The need is
scale neutral MSMEs to large enterprises Information asymmetry -
between institutional and retail investors Regulatory regime still
evolving on insider trading, market manipulations, relevant
disclosures etc. Foreign Portfolio Investors will demand more
transparency and greater disclosure from Indian Companies
Slide 6
CEO Creative, Enlightment & Organic New Clause 49 has been
incorporated in the listing agreement that deals with - Board of
Directors - Audit Committees - Remuneration Committee of the Board
- Board Procedures - Management - Shareholders - Report on
Corporate Governance - Compliance
Slide 7
Duty & Description Compliance with internal regulations
& Ligislation Checking the company complies with : Memorandum
& Articles of Association and that these are up to date The
Companies Act 1985 Companies and other legislation
Slide 8
Duty & Description Maintenance of records Keeping the
companys statutory books and records, including registers of
Mortgages and charges Directors and secretary Directors interests
Members Debenture holders
Slide 9
Duty & Description Administration of board and general
meetings Procedural compliance and administration in : Preparing
and sending out notices Taking minutes of meetings and keeping the
minute books
Slide 10
Duty & Description Filling forms etc. at companies House
This must be done in the time limits given. Particular importance
is attached to filling company accounts and returns, together with
notices of changes to registers, especially charges.
Slide 11
Duty & Description Collation of accounts and compliance
with legislation Shareholder communications Ensuring that the
companys accounting records are : Maintained in accordance with
company legislation Prepared in time In the form required by
company law ad accounting standards Copies of the accounts are
distributed to the appropriate persons within the correct time
constraints. Not applicable to a charitable company limited by
guarantee.
Slide 12
Duty & Description : Access to records Ensuring that
eligible persons can review company records and that the company is
compliant with the Data Protection Act
Slide 13
Duty & Description Legal Advice Share administration
Advising directors on their legal responsibilities and updating
them on developments in the law concerning the running of companies
Not applicable to a charitable company limited by guarantee
Slide 14
Duty & Description Information Link Maintaining
communication links between Directors and non- executive directors
Shareholders and the board Employees and the board Media / press
and the company
Slide 15
Duty & Description Running the registered office
Administering the registered office Dealing with correspondence
Receipt and care of official documents Making documents required by
law available for inspection by third parties
Slide 16
Duty & Description Security of documentation Managing the
security of Company seal Certificate of incorporation
Certificate(s) on change of name Memorandum and Articles of
Association Directors service contracts Share certificates and
stock transfer forms Other documents of title.
Slide 17
Value Addition through Stability and growth Builds confidence
Reduces perceivded risks, consequenty reducing cost of capital
Leverage a competitive advantage in the final market Long terms
sustenance of stakeholders relationship A good corporate citizen
becomes an icon and enjoys a position of pride Stakeholders aspire
to enter into relationships with enterprises whose governance
credentials are exemplary.
Slide 18
A self regulatory mechanisms Basic regulations and best
practices will be effective when tailored to the individuals
enterprise with reference to the stage of development, specific
needs and the legal, economic, social and cultural environment it
operates in. If the trumpet gives an uncertain sound, who will
prepare for the battle?
Slide 19
Management SAW= Science (practical), Action, Wisdom
(tacit/explicit) Integrity of the management Ability of the board
Adequacy of the process Commitment level of individual broad
members Quality of corporate reporting Participation of
stakeholders in the management How is knowledge created ? Looking
around
Slide 20
Performance evaluation 3H= Head + Heart + Hand 1. Normative
Responsibility of Corporations 2. Socio-Economic Development
Slide 21
Three Forms of Corporate Responsibility Economic
Responsibilities of Corporations Acting in accord with the logic of
competitive marketing and respecting the principle of shareholder
democracy Political responsibilities of Corporations abiding by
legitimate law, respect for the system of rights and principle of
constitutional state. Social responsibilities of Corporations
understands itself or promotes itself either as a community with
shared values or as a part of larger community.
Slide 22
Factors in Promoting Corporate Responsibilities to
Socio-economic Development Objective Factors Technical knowledge
Managerial skills Knowledge of locals community needs Knowledge of
development planning Subjective Factors Pragmatic motivations ST
(cost) - Name recognition - Goodwill - Marketing opportunities -
Increased company morale Ethical motivations - LT (they are and
want to be ) - sense of individual identity - sense of common
identity
Slide 23
Custodian of good of Good Governance a) Good governance is not
merely a protective edge. It is a cutting edge. b) It is not
recommended because it is good for the shareholders and other state
holders. It is essential because it is good for the company itself
in the present competitive environment. c) Corporate performance in
a competitive environment requires dynamism and positive activism.
The boar should remain unified and decisive. d) Minority
shareholders have a right to hones and fair dealings. They should
be adequately protected from mismanagement, oppression and
misrepresentation. e) Good corporate governance is therefore not
about avoiding risks, it is about managing them effectively.
Slide 24
Some Reflections a) Corporate governance is necessary even
essential for the companys own benefit nor merely for the benefit
of the shareholders and the stakeholders. b) The purpose of
business is not safety and security it is adventure with reasonable
security. c) Subject of the risk management is critical to good
governance in a competitive environment. d) Doctrinaire fallacy i)
Firstly : Protection of minority shareholders. This is important
but it is not a function of good governance. It is a matter of
separate protection by the Companies Act against protection of
minority shareholders. It is also necessary to protect the majority
shareholders against the unjust and unfair expectations of the
minority.
Slide 25
Some Reflections (Contd..) d) Doctrinaire fallacy ii)Secondly :
The shareholders should be given some part in management of the
company. This is also quite illogical since the shareholders have
themselves assigned the right of management to the directors.
iii)Thirdly : Board should not become a debating society rather
than an instrument of effective and decisive action. iv)Fourthly :
Should be transparency. CG is about preserving a reasonable fair
balance between transparency on the one hand and the need for the
secrecy on the other.
Slide 26
Some Reflections (Contd..) e) About ethics We need Ethics for
success. There is no ethics in failure even if failure is achieved
honestly and transparently. Let us not excuse failure almost as a
manifestation of ethical behaviour. f) The medium and small sectors
also need good corporate governance even more than the large
sector. g) Good corporate governance is need not only by profit
making enterprises but in the social and non-profit sectors like
schools, colleges, universities, hospitals and municipalities need
good corporate governance perhaps even to a greater extent.
Slide 27
Some Reflections (Contd..) h) Corporate governance ownership
from management and control. Banks and financial institutions to
ask for promoters personal guarantee. Personal risk exposure can
not be reconciled with personal exclusion from management. If you
insist on personal guarantee you must expect and accept personal
involvement. i) If shareholders are to distance themselves from
management, this must also be true in the case of the public sector
i.e. MPs must not exercise management rights from the back seat on
the basis that they are representing the real owner.
Slide 28
Rules, Evolve and Revolve Rotation can be a positive force
(swastik )High self esteem or a negative force ( invereted swastik)
Low self esteem Freedom from stress ; (1) renunciation / restraint
(2) accommodation ( Kshanti) (3) Equanmity (samadittavam) (4)
Contentment (santosh) We have witnessed three revolutions - (1)
industrial revolution (2) service revolution (3) knowledge
revolution From efficiency to effectiveness to excellence
Individual to enterprise to culture
Slide 29
Self reverence, self knowledge, self control these three alone
lead life to sovereign power- Alfred Tennyson Revolutionise two
meanings (a) Fundamental Change (b) Completed Rotation
Revolutionise Your Business Revolutionise Your Culture
Revolutionise How Innovative Creates Prosperity Revolutionise The
Society In Which You Operate
Slide 30
Boldness in business is the first, second and third thing
Thomas Fuller Build company profits on responsible action and skill
Create business models based on sharing and caring Identify role
models who combine thought work and deed. Develop young talent
driven by human values and bring them to business The brain is not
a sex organ therefore, there can be no gender bias or glass
ceilings.
Slide 31
Business underlies everything in our national life including
spiritual life witness the fact in the Lords prayer. The first
petition is for our daily bread. No one can worship God or love his
neighbour on an empty stomach Woodraw Wilson 1912 THANK YOU Email :
[email protected]