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Corporate Governance

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Corporate Governance

What is Corporate Governance?
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor(employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.

Objectives & Principles :
Corporate governance is a major concern in the Asia and Pacific region, especially in the aftermath of the 1997 Asian financial crisis. The size and frequency of recent corporate governance debacles show that poor governance is not only a formidable hurdle to surmount but is also at the forefront of economic development issues.
Ten core principles have been listed by Asian Development Bank (ADB). An attempt has been made to model the principles in a manner consistent with global best practice.

Principle 1: Performance Orientation The principal objective of business enterprises is to enhance economic value for all shareholders by making the most efficient use of resources. A company that meets this shareholder value creation objective will have greater internally generated resources, improving its prospects for meeting its environmental, community, and social obligations; pay taxes; reward, train, and retain key staff; and enhance employee satisfaction. A key focus area is a company’s human capital strategy, which is a lead indicator of corporate success. Principle 2: Nomination and Compensation Committees A key success factor is the quality of leadership of an enterprise. A nomination committee with a written mandate and terms of reference...

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