practices of corporate governance

1. corporate governance
Practices for Corporate Governance
Prepared by : Bhupinder Kaur
S.D.COLLEGE, AMBALA CANTT

2. 1. Building a Competent Board
• Boards should have a composition that incorporates all of the
necessary skills and abilities to make sound decisions for the
corporation. Board directors must have implicit trust in each other so
that board discussions are productive, even when debates are long
and wrought with many strong opinions.
• Board directors, board committees and the whole board should
participate in annual self-evaluations to identify their strengths and
weaknesses.

3. 2. Aligning Strategies With Goals
• align their strategies and risk management
activities with the company’s goals.
• Boards should use all of their human resources
and other tools to identify and assess all forms of
risk. The board needs to work together to develop
the company’s risk tolerance and risk profile.
• Additionally, they need to ensure that the
company has the proper framework and controls
in place, so they can monitor risk and mitigate it
when necessary.
• Corporate best practices require board directors
to look at risk and strategy on a short- and long-
term basis.

4. 3. Being Accountable
• Boards need to develop strong internal controls
and to monitor them often.
• Having reporting systems that are accurate and
transparent, and that have a system of adequate
checks and balances, is considered an
important part of best practices.
• Best practices for accountability include
making decisions about the correlation between
attracting the most talented board nominees
and offering them enough compensation to
make board work worth their while, but
without creating a conflict of interest. It’s
generally preferred for board committees to
manage and oversee board director
remuneration.

5. 4. Having a High Level of Ethics and Integrity
• Board directors must consider their
fiduciary duties whenever they speak for
the corporation. The best nominees are
people with a high level of ethics, honesty
and integrity in their speech, their works
and their relationships with people.
• Boards should have a clearly stated
conflict of interest policy and ensure that
board directors declare all conflicts of
interest and refrain from voting on such
matters. Boards should also institute
policies for whistleblowing and reporting
noncompliance.

6. 6. Defining Roles and Responsibilities
• All board directors should have job descriptions and an outline that
describes their duties and responsibilities. Boards almost always need
to delegate some of their responsibilities to committees, such as the
nominating or governance committee, audit committee,
compensation committee and other special committees, as needed.

7. 7. Corporate Social Responsibility (CSR)
• Being among the few countries to legislate on CSR, it is mandatory
for companies to invest minimum 2% of the profits in the last 3 years
for CSR activities. Otherwise proper reasons should be mentioned in
the reports in case of failure. The companies seem to be reluctant
towards making such investments.

8. 1. Building a Competent Board

9. Stakeholders

10. • Confederation of Indian Industry (CII): In 1991, industrial licensing
was abolished and economic reforms on a wide scale started taking
shape. With effect from 1st January 1992, in keeping with the
government's decision to opt for the liberalization of the Indian
economy, the name of CEI was changed to Confederation of Indian
Industry (CII).