Ethics and Human Interface:

17. Corporate Governance.

IAS Exam preparation

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  1. Corporate governance is a practice that reflects on a company’s proper management and regulation.
  2. It provides regulations on the power relations between shareholders, control committees, and stakeholders such as workers, vendors, consumers and the general public.
  3. Sustained growth in all organizations, which demands compliance with the best corporate governance principles, needs collaboration by all stakeholders.
  4. In this respect, the management must act as trustees for general shareholders and avoid asymmetry between various shareholder sections, in particular among the owners and the other shareholders.
  5. Corporate governance is generally fair, transparent and ethical management of a corporation which gives the shareholders maximum benefits.
  6. Ethics is at the centre of corporate governance, and management must show accountability for their actions on the global community scale.
  7. Corporate governance is a relatively new term that describes a process practised as long as corporate entities prevail. This mechanism guarantees that the business is managed in accordance with the highest level of integrity and productivity in the event that it is the safest way to protect the rights of all market stakeholders and to encourage them.

Definition of Corporate Governance

A basic definition of corporate governance, which has been widely recognized, was given in a report by the committee under the chairmanship of Sir Adrian Cadbury tiled (the Cadbury Report): This definition of corporate governance has been endorsed in various other discourses on the subject, including the 1998 final report of the Committee on The Financial Aspects of Corporate Governance.

Corporate governance is a process that manages and regulates organizations. Management committees are accountable for their organizations’ governance. The role of shareholders in management is to appoint managers and auditors and to ensure that a proper structure of governance is in place. The leaders are accountable for defining the strategic objectives of the company, giving leadership to carry them out, overseeing the business management and reporting to their management of the company to shareholders. The actions of the Council are governed by laws, rules and the General Meeting of shareholders.

Practice question:

  1. What is Corporate Governance? What are the ethical issues with Corporate Governance in India? Suggest measures to improve Corporate Governance in India.

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