...1.0 Introductions 2.0 Literature review 3.0 Background and history of Development CG The term of corporate governance not just been introduced but it also drew attention of the public about the weaknesses of Malaysian corporate governance practice due to the Asian Financial Crisis in 1997. After 1998, the government of Malaysia decided to adopt the corporate reforms to enhance the quality of good corporate governance practice in the country. The main sources of the Corporate Governance reforms agenda in Malaysia other than Malaysian Code on Corporate governance are the Capital Market Master Plan (CMP) and also Financial Sector Master Plan (FSMP). This sources provides guidelines on the principles and best practices in corporate governance and the direction for the implementation as well as charts for the future prospects of corporate governance in Malaysia. Malaysian Code on Corporate Governance is an initiative that established by the Financial Committee on Corporate in 1998. This committee is consists of both government and also industry. MCCG was introduced on March 2000. This code brought a systematical change in structure of public and also private corporation. The principles underlying the report focus on four areas which are board of directors, directors’s remuneration, shareholders and accountability and audit. Compliance with the code is not mandatory. However, the listed companies in Bursa Malaysia are required to prepare their annual report on how they have...
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...Table of Contents 1. TITLE PAGE 4 EXECUTIVE SUMMARY 6 3. INTRODUCTION: 6 4. CONTEXT OF THE COMPANY: 7 5. WHAT IS CORPORATE GOVERNANCE: 8 6. THE PURPOSE AND BENEFIT OF GOOD GOVERNANCE: 8 7. GUIDING PRINCIPLES OF GOOD GOVERANCE: 9 8. REVIEW OF REPUBLIC BANK LIMITED’S CORPORATE GOVERNANCE: 9 8.1 Organisation Structure: 10 8.2 Republic Bank Limited’s Core Values: 11 8.3 Republic Bank Limited’s Code of Conduct and Ethics: 12 8.4 Corporate Social Responsibility (CSR) in Republic Bank Limited: 12 8.5 Policies and Procedures in Republic Bank Limited: 13 9. CONCLUSION: 13 10. RECOMMENDATION: 14 -15 11. REFERENCES: 16 12. APPENDICES: 17 Appendix I 17 Appendix II 18 Appendix III 19 - 20 Appendix IV 21 - 22 Appendix V 23 TO: THE CHAIRMAN, REPUBLIC BANK LIMITED FROM: CONSULTANT DATE: 03RD MARCH, 2014 SUBJECT: IMPROVING CORPORATE GOVERANCE IN REPUBLIC BANK LIMITED 2. EXECUTIVE SUMMARY It has been established that Organisations need to have a Competitive Advantage to remain viable and profitable. In order to accomplish this, one (1) essential tool is good Corporate Governance. This paper first identifies what good Corporate Governance entails then reviews the Corporate Governance process of Republic Bank Limited (a local banking organisation) utilising the tools, concepts and theories of the governance process identified. Some recommendations have been made to further enhance what the bank currently practices. 3. INTRODUCTION: The extent...
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...Corporate Governance Issues and Responsibility On the basis of the principles and rules outlined by the New Zealand Security Commission and code of ethics adopted by NZFSU and PGGW Wrightson in their company’s prospectus, they have failed to follow good corporate governance in their companies. In this case study, there were many corporate governance issues and some of them are highlighted below Board Composition and review: There was imbalance of independent and non independent directors in the board. Craig Norgate, who was the Chairman of PGG Wrightson failed to promote cooperation and efficiency amongst the board members, and was unsuccessful in trying to maintaining good relationship between the management and the board. The Chairman of NZFSU and PGWW failed to comply with the rules of Corporate Governance that, there should be a mix of balance and skills according to the size and complexity of firms, and in this case study, there were fewer independent directors and the need of them were felt by NZFSU, when the company’s current directors were unable to cope up with the failure of the company The board need to achieve the right mix, and should choose directors who have the required skills and knowledge and can contribute to achieve the goal of the company and provide more benefits to the shareholders. There should be a rigorous process for nomination and selection procedure of a director. The Chairman of Boards of PGG Wrightson and NZFSU, were accused in not disclosing...
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...CORPORATE GOVERNANCE 1 CORPORATE GOVERNANCE We can attribute societies demand for improved corporate governance on the number of recent financial scandals that have occurred in both the United States and abroad in the past decade. For many organizations, the way to rebuild shareholder confidence was to implement a fundamental framework of procedures that would ensure scandals like Enron, WorldCom and Tyco would not occur in the future. It is precisely these scandals that made corporate governance the focus of organizations worldwide. Corporate governance is defined as the principles and processes that provide the strategies on how an organization directs and obtains its goals, the oversight process for implementing effective accountability from its directors and managers (Rittenberg, Johnstone, & Gramling, 2012). What are two of the principles that surround corporate governance? How do they tie into the recent legislation that was put into place to resolve ethical challenges and changes within the last decade? Two principles that surround corporate governance include “successful management and ethical corporate culture and independence and objectivity” (Creel, 2013). It is management’s responsibility to create a culture of “integrity and ethical behavior” (Rittenberg, Johnstone, & Gramling, 2012). In addition, it is imperative for board members to maintain their objectivity and their judgment must remain independent and in the best interest of its stakeholders. Corporate...
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...Examination Paper IIBM Institute of Business Management Examination Paper Corporate Governance Section A: OBJECTIVE TYPE (20 marks) MM.50 • • • This section consists of Multiple choice questions. Answer all the questions. Questions carry 1 mark each. 1. In the second version of McKinsey’s model called “the Central model” governance chain is represented by a. Well-developed equity market & dispersed ownership b. Underdeveloped equity market & concentrated ownership c. Well-developed equity market & concentrated ownership d. Underdeveloped equity market & dispersed ownership 2. Corporate governance refers to a combination of law, rules, regulations and a. Value b. Wealth c. Voluntary practices d. Customer Satisfaction 3. ____________, is one of the major tools. Corporations use to direct persuasive communication to target buyers & the public. a. Advertising b. Media c. Press d. None 4. Policy adopted by the monetary authority with respect to the supply of money is called a. Monetary Policy b. Fiscal Policy c. Budgetary Policy d. Economic Policy 5. Cash reserve requirements refer to the a. Purchase & Sale of government securities & other approved securities by the Central bank. b. Changes in bank rate by the Central Bank c. That portion of bank’s total cash reserves which they are statutorily required to hold with the RBI. IIBM Institute of Business Management 1 Examination Paper d. The particular level of liquid ity maintained by commercial banks. 6. This committee...
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...board through a one-to-one training for up to a year. The training includes workshops on corporate governance, risk management, roles of a non-executive director and assistance in capturing types of board aligned for their interest and strengths (Sealy, Doldor, & Vinnicombe, 2009). The Female FTSE Report in 2008 has named 1,800+ women at committee level across a variety of industries and these names were compiled as a very real response to the ‘lack of pipeline’ argument. However, these are just a list of names envisioned to be on the radar of search consultancies. Initiatives in database management in the UK therefore saw a major executive search consultancy announced a compilation of a database of senior female executives in the FTSE 250 companies aimed to increase the percentage of female board members on the organizations (Sealy, Doldor, & Vinnicombe, 2009). In addition, the Appointment Commission and UKRC for women in SET have been actively managing their database of potential female candidates. These organizations will match opportunities and those women on their databases. In 2004, a FTSE 100 cross-company set up a mentoring scheme aimed to provide mentoring at senior level for senior women in the FTSE 100 companies who were deemed to be potential board members (Sealy, Doldor, & Vinnicombe, 2009). In Canada, a certified mixed-sex training programme is run by the Corporate Directors aimed to prepare individual men and women for board positions. Furthermore...
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...What is Corporate Governance?Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals.Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the two. The owners must see that individual’s actual performance is according to the standard performance. These dimensions of corporate governance should not be overlooked. | Corporate Governance deals with the manner the providers of finance guarantee themselves of getting a fair return on their investment. Corporate Governance clearly distinguishes between the owners and the managers. The managers are the deciding authority. In modern corporations, the functions/ tasks of owners and managers should be clearly defined, rather, harmonizing. Corporate Governance deals with determining ways to take effective strategic decisions. It gives ultimate authority and complete responsibility to the Board of Directors. In today’s...
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...fraud. Various academic theories surrounding corporate governance will be explored (agency; stewardship and stakeholder) in examining the investor protection framework within the banking industry. Peter Gourevitch argues that various differing corporate governance models exists globally as a result of differing political climates which shape the rules and regulations that make up a country’s corporate governance model. Erik Berglof and Stijn Claessens argue that enforcement is the key to good corporate governance. However, enforcement is a result of a country’s political system which ultimately decides on the framework for regulation and enforcement. Peter Mulbert discusses corporate governance of banks in a principal-agent framework and that the corporate governance of a bank differs from those of a regular firm. This is contrasted with T.G. Arun and J.D. Turner’s discussion of corporate governance of banks in developing economies. Rafael La Porta et al. in their paper “Investor protection and corporate governance” argue that “that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank-centered and market-centered financial systems.” They continue to argue in their paper “Law and Finance” that investor protection are usually strongest in common-law based countries as compared to civil-law based countries within a corporate governance framework. This literature review provides a very...
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...B: Short Notes | Question | Answer | 11(continued)1(continued) | Clause 49The term ‘Clause 49’ refers to clause number 49 of the Listing Agreement between a company and the Stock Exchanges on which it is listed. The Listing Agreement is identical for all Indian Stock Exchanges, including the NSE and BSE. This clause is a recent addition to the Listing Agreement and was inserted as late as 2000 consequent to the recommendations of the Kumar Mangalam Birla Committee on CG constituted by SEBI in 1999. Clause 49, when it was first added, was intended to introduce some basic CG practices in Indian companies and brought in a number of key changes in governance and disclosures (many of which we take for granted today). In late 2002, the SEBI constituted the Narayana Murthy Committee to “assess the adequacy of current corporate governance practices and to suggest improvements.” Based on the recommendations of this committee, SEBI issued a modified Clause 49 on October 29, 2004 (the ‘revised Clause 49’) which...
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...reviewing the performance of the chief executive 3. ensuring the availability of adequate financial resources. 4. approving annual budgets 5. accounting to the stakeholders for the organization’s performance 6. setting the salaries and compensation of company management. Sub committees Nomination and remuneration committees Nomination committees review and consider the structure and balance of the board and make recommendations regarding appointments, retirements and terms of office. The remuneration committee’s role is to ensure that remuneration arrangements support the strategic aims of the business and enable the recruitment, motivation and retention of senior executives while complying with the requirements of regulatory and governance bodies, satisfying the expectations of shareholders and remaining consistent with the expectations of the wider employee population. It will assume responsibilities to equitably, consistently and responsibly reward executives having regard to the performance of the corporation, the performance of the executive and the general pay environment. Audit committees the audit committee is a creation of the board of directors of the firm. Its membership is comprised of members of the board of directors. The primary role of the audit committee in most publicly traded companies is to assist the board of...
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...Efficacy of Corporate Governance Contents 1. Definition of Corporate Governance 2. History of Corporate Governance – Pre and Post Liberalization 3. Objectives of Corporate Governance 4. Need of Corporate Governance 5. Framework of Corporate Governance 6. Principles of Corporate Governance in India and in the World 7. Merits and Demerits of Corporate Governance 8. Impact of Violation of Corporate Governance Laws 9. Case Study – a) Satyam b) Pfizer c) 3rd Company 10. Conclusion 11. Bibliography Definition "Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society"-(Sir Adrian Cadbury in 'Global Corporate Governance Forum', World Bank, 2000) Corporate governance is the relationship between corporate managers, directors and the providers of equity, people and institutions who save and invest their capital to earn a return. It ensures that the board of directors is accountable for the pursuit of corporate objectives and that the corporation itself conforms to the law and regulations. - International Chamber of Commerce Corporate Governance deals with laws, procedures, practices and implicit rules that...
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...CORPORATE GOVERNANCE A system of checks and balances between the Board, Management and Investors to produce an efficiently functioning the corporation, ideally geared to produce long term value. ISSUES IN CORPORATE GOVERNANCE * Asymmetry of power * Asymmetry of information * Interests of shareholders as residual owners * Role of owner management * Theory of separation of powers * Division of corporate pie among stakeholders CURRENT STATUS ON CORPORATE GOVERNANCE * Insistence on forms and structures * Overarching regulations * Regulatory overkill * Lack of adequate number of strong, independent directors * Large liabilities for companies and officers Scope of Corporate Governance * “Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interest of individuals, corporations and society. * The foundation of any structure of corporate governance is disclosure. Openness is the basis of public confidence in the corporate system and funds will flow to centers of economic activity that inspire trust.” -Sir Adrian Cadbury. * “Shareholders role in governance is to appoint the directors and the auditors. Poor corporate governance has ruined companies...
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...Why corporate governance: Corporate governance is a multifaceted subject. An important part of corporate governance deals with accountability, fiduciary duty and mechanisms of auditing and control. In this sense, corporate governance players should comply with codes to the overall good of all constituents. Another important focus is economic efficiency, both within the corporation (best practices guidelines) as well as extremely (national institutional frameworks). The word ‘corporate governance’ has become a buzzword these days because of two factors. The first is that after the collapse of the Soviet Union and the end of the cold war in 1990, it has become the conventional wisdom all over the world that market dynamics must prevail in economic matters. The concept of governmental controlling the commanding heights of the economy has been given up. This, in turn, has made the market the most decisive factor in settling economic issues. This has also coincided with the thrust given to globalization because of the setting up of the WTO and every member of the WTO trying to bring down the tariff barriers. Globalization involves the movement of four economic parameters namely, physical capital in terms of plant and machinery, financial capital in terms of money invested in capital markets or in FDI, technology, and labor moving across national borders. The pace of movement of financial capital has become greater because of the pervasive impact of information technology and the...
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...and ethical lapses have heightened people, press, and investor security of companies, creating demand for a corporate culture of integrity driven performance and a new corporate transparency. Management and boards now feel compelled to ensure that proper governance processes are in place to protect corporate reputation, brand image and share holder value. According to Pricewaterhouse Cooper’s 8th Annual global CEO survey (Dec 2004), 50% of retail industry CEOs believe that there is a strong relationship among all elements of GRC (governance, risk and compliance) and that effective governance can be a value driver and a benefit versus a cost, to their companies. Effective corporate governance requires management and board involvement, accountability, embracing the processes, compliance, and structure required to direct and manage the affairs of a corporation. Its overall goal is to ensure the financial viability to the enterprise and enhance share holder value. For the retail and customer industry, globalization, which entails multinational operations, various financial reporting systems, and complex supply chain with wholesalers, distributors, and multiple types of retailers, not to mention multiple brand portfolios, and various types of outlets, provides significant rationales for management and boards to develop an effective GRC program. Successful corporate governance depends largely on trade-off among the various conflicting interest groups like government, society, inventors...
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... Business Foundations BIB 1A CORPORATE GOVERNANCE “What is Corporate Governance? Why is it important for Business?” The business environment is formed of complex interrelationships among and between companies of the same industry. With the process of globalization taking place in the business community, in different countries, all around the world, good ethical practices have become almost crucial to every business transaction, and work on effectively operating in the global market. Therefore, in order to gain credibility and a good position in the international field, values such as trust, responsibility and integrity are important between transacting business corporations. Thus, laws and policies that protect the interests of companies and corporations have been put into effect due to a “standardization of the code of ethics” in the corporate world. This has led to the creation of a better attitude among business establishments, accredited on the corporate governance applied within the company. The main goal of this paper is to explain what corporate governance is, to develop its principles, mechanisms and controls, and its efficiency in the world of business. The OECD Principles of Corporate Governance states: "Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of...
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