BY HARDEEP SHARMA

Corporate governance is the set of policies, people, laws, regulations and repor
ting of corporate business entities. It is a primary focus of regulators in toda
y’s world. Sound corporate governance brings prosperity to the masses in the econo
my by raising investor confidence and proper management of the investments. Good
corporate governance is vital for organizations to survive.
Corporate Governance is defined as the general set of customs, regulations, poli
cies and laws that determine to achieve certain targets for which a firm should
be run. It is clear that corporate governance exists at a complex intersection o
f law, morality and economic efficiency, considering that issues of executive co
mpensation, financial scandals and shareholder activism are all tied up with it.
All parties to corporate governance have an interest, whether direct or indirec
t, in the effective performance of the organization. Directors, workers and mana
gement receive salaries, benefits and reputation, while shareholders receive cap
ital return, customers receive goods and services and suppliers receive compensa
tion for their goods or services.
Ethics refers to a system of moral principles a sense of right and wrong, and go
odness and badness of actions and the motives and consequences of these actions.
Ethics is seen as an individual’s own personal attitude and a believe concerning
what is right or wrong, good or bad. It is important to note that ethics reside
within individuals and that organization doesn’t have ethics. People have ethics
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No discrimination should be done on the basis of caste ,color , and religion, Th
e polices should be fair and transparent Proper provision of safety should be pr
ovided by the company to the employees. There should be proper honesty, loyalty,
and integrity in the employees. The company’s resources should not be utilized by
the employees for their personal usage. Company should provide better environme
nt condition Information about employee’s personal lives, health, and work evaluat
ions should be kept confidential. Regular measurement of employee satisfaction s
hould by company. To neither give nor take any illegal payment, remuneration, gi
ft, donation, or comparable, benefits to obtain business or favors. To comply wi
th all regulations regarding preservation of the environment. Employee should re
port to management any actual or possible violation of code or an event that cou
ld affect the business or reputation of the employee’s company.
Corporate governance exists at a complex intersection of law, morality and econo
mic efficiency, considering that issues of executive compensation, financial sca
ndals and shareholder activism are all tied up with it. Corporate governance als
o includes the relationships among the many stakeholders involved and the goals
for which the corporation is governed.
• The Board of Directors • The Upper Management • The Stock holders • The Regulators and
other Stakeholder institutions • Reporting • Company Policy • Company Activity • The CE
O, Company Secretary, and CFO • Meetings
It focus on what our relationships are and ought to be with our employees, our c
ustomers, our stock holders, our creditors, our suppliers, our distributors, our
neighbors and other members of the community / society in which we operate. Que
stions, like moral responsibilities, obligations and virtues in business decisio
n making also form part of ethics e.g. choices and character of persons, the pol
icies and cultures of organization.
Ethics is concerned with the code of values and principles that enables a person
to choose between right and wrong, and therefore, select from alternative cours
es of action. Further, ethical dilemmas arise from conflicting interests of the
parties involved.
a) The liberalization and de-regulation world over gave greater freedom in manag
ement. This would imply greater responsibilities. b) The players in the field ar
e many. Competition brings in its wake weakness in standards of reporting and ac
countability. c) Market conditions are increasingly becoming complex in the ligh
t of global developments like WTO, removal of barriers/reduction in duties. d) T
he failure of corporate due to lack of transparency and disclosures and instance
s of falsification of accounts/embezzlement and the effect of such undesirable p
ractices in other companies.
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Rights and equitable treatment of shareholders Interests of other stakeholders R
ole and responsibilities of the board Integrity and ethical behavior Disclosure
and transparency
“There are those who will tell you that business and ethics cannot stand together.
In the short run it might appear that companies pay a price for adhering to val
ues while their competitors get ahead in a shorter time frame, but in the long r
un people would learn to distinguish, stakeholders learn to ask the right questi
ons, and distinguish between the grain and chaff. Those that don t subscribe to
values will fall by the way side; those that subscribe to values will last the c
ourse and will set benchmarks.” M. Damodaran Chairman, Securities and Exchange Boa
rd of India
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Several corporate governance structures Extends beyond corporate law The committ
ee has primarily focused on investors and shareholders. Committee believes that
its recommendations will go a long way in raising the standards of corporate gov
ernance
Committee primarily related to audit committees, audit reports, independent dire
ctors, related parties, risk management, directorships and director compensation
, codes of conduct and financial disclosures.
Brand image for the company Greater loyalty Greater commitment to the employees
The employees will become more creative
Every individual has to start culturing the human values in the inner world of h
imself because they say, “Those who can see the deepest into the past can also see
farthest into the future”