CORPORATE GOVERNANCE

Definition of corporate governance: "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." "Corporate governance is about promoting corporate fairness, transparency and accountability" J. Wolfensohn, president of the Word bank, as quoted by an article in Financial Times, June 21, 1999. Corporate governance comprises the systems and processes which ensure the efficient functioning of the firm in a transparent manner for the benefit of all the stakeholders and accountable to them. The focus is on relationship between owners and board in directing and controlling companies as legal entities in perpetuity. A companys ability to create wealth for its owners however, depends on the role and freedom given to it by society. Sir Adrian Cadbury in his preface to the World Bank publication, Corporate Governance: A Framework for Implementation; states that, Corporate Governance isholding the balance between economic and social goals and between individual and community goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of these resources. The aim is to align as nearly as possible the interest of individuals, corporations and society. The incentive to corporations is to achieve their corporate aims and to attract investment. The incentive for state is to strengthen their economies and discourage fraud and mismanagement. The focus on corporate governance arises out of the large dependencies of companies on financial markets as the preeminent source of capital. The quality of corporate governance shapes the future and the growth of the capital market. Strong corporate governance is indispensable to resilient and vibrant capital market. In the context of globalization, capital is likely to flow to markets which are well regulated and practice high standards of transparency, efficiency and integrity. Corporate Governance refers to the structures & processes for the efficient & proper direction & control of companies (both private and public) in the interest of all stakeholders. Corporate Governance is concerned with the establishment of a system whereby the Directors are entrusted with responsibilities and duties in relation to the directions of Corporate affairs . It is concerned with accountability of who are managing it. It is concerned with morals, ethics, values, parameters, conduct and behaviour of the Company and its management . It is an interplay between Companies, Shareholders, Creditors, Capital Markets, Financial Sector, Institutions and Company Law .