The Corporation and Corporate Governance

- is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

A stock corporation is a for-profit corporation which has shareholders (stockholders), each of whom receives a portion of the ownership of the corporation through shares of stock. These shares may receive a return on their investment in the form of dividends. Shares are used for voting on matters of corporate policy or to elect directors, at the corporation's annual meeting and at other meetings of the corporation. A non-stock corporation can be formed for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, such as trade, industry, agricultural and like chambers, or any combination thereof (Section 88, Corporation Code).

Survival a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis. Profit maximization try to make the most profit possible most like to be the aim of the owners and shareholders. Profit satisfying try to make enough profit to keep the owners comfortable probably the aim of smaller businesses whose owners do not want to work longer hours. Sales growth where the business tries to make as many sales as possible. This may be because the managers believe that the survival of the business depends on being large. Large businesses can also benefit from economies of scale.

- owner of one or more shares of stock in a corporation - owner of one or more shares or units in a Mutual Fund

- Owner of a bond ( bondholders may be individuals or institutions such as corporations, banks, insurance companies, or mutual funds).

- One serving as an officer or owner of a bank.

- Member of the board of directors of a corporation

- A conflict of interest (COI) occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other.

Self-dealing Outside employment Family interests Gifts from friends who also do business Pump and dump

Agency theory is developed around the concept of contractual relationships between two groups with conflicting objectives

a harmony between the actions of individuals to achieve personal goals to help the achievement of organizational goals. present when individuals, departments and divisions focus their efforts on meeting organizational goals is achieved when individuals in the organization strive or are induced to strive towards the company goals ensures that the action of manager taken in their best interest is also in the best interest of the organization

Organizational Goals Profitability Productivity Effectiveness and efficiency Personal Goals Career Advancements Recognition Status Job Satisfaction Other kind of Social and Psychological Factors Relating to the Employees.

Ensures frictionless working. Ensures achievement of organizations goal/strategic objective Ensures coordination & motivation of all concerned Ensures consistency in the working of all concerned. Gives fair chance to its employees to achieve their personal goals. Enhances the loyalty towards the company. Satisfies prime requirement of Management Control System (MCS)

Informal Factors External factors- work ethic and appropriate industry-specific norms. Internal factors - culture, management style, informal relationships within the organization and perception and communication.

Formal Factors Management Control System the process of evaluating, monitoring and controlling the various sub-units of the organization so that there is effective and efficient allocation and utilization of resources in achieving the predetermined goals Rules

Attitude- Positive attitude bestows positive results on the entire organization. Motivation- can be defined as to make someone want to achieve something or to make someone willing to work hard in order to do it. Perception- a psychological process which lets one interpret the sensory stimulation into meaningful information about the environment Good Work Ethic

Participating in formulating strategy of the company; Oversight of management; Independent stand; Protecting the interests of all shareholders; Organize an examination and verification committee or other committees.

Providing corporate administration services to corporate clients; Liaising with solicitors, clients, and regulatory agencies globally; Ensuring corporate client compliance with global statutory requirements; Providing secretarial services as required.

Management Buy-out

- is the opposite of a buy out in that a management team attempts to take control of assets that they do not already manage. The difference to a management buy-out is in the position of the purchaser: in the case of a buyout, they are already working for the company. In the case of a buy-in, however, the manager or management team is from another source.

 Non-Core Divestments and Efficiency

Improvements

Management Incentivisation

Insolvency
Succession

Bundled Businesses
Aspiration Divergence

Employee Share Scheme provides employees with the opportunity to acquire shares in the company, thus enabling them to participate in the companys prosperity and consequently such opportunity is an incentive for the employees to contribute further to the success of the Company
Employee share schemes have the potential to motivate staff by providing long term tax efficient incentives. In some cases existing shareholders may not want to give them actual shares in the company or they may not want them to leave still owning shares in the company so flexibility is crucial.

- Executive Share Schemes is an arrangement whereby certain directors and employees are given the opportunity to purchase stock in the company at a fixed price at a future date. Executive share schemes are supported as a method of improving company performance through:

Motivating and retaining key employees; Attracting quality management; and Providing performance incentives which allow executives to share the rewards of the success of the company.

Ethics is a science of the morality of human conduct. Human conduct is free, knowing, deliberate human activity. Business ethics - Business ethics (also known as Corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment.

Recruit and Hire Well 2. Educate Staff about What's at Risk 3. Be Transparent about Your Finances 4. Speak Truth to Authority 5. Include Ethics in Each Employees Orientation
1.

- The chief financial officer (CFO) is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management.

The financial statement, prepared by the management of company, present fairly its states of affairs, the results of its operation, cash flows and change in equities. Proper books of accounts of the company have been maintained. Appropriate accounting policies have been consistently applied in preparation in financial statements and accounting estimates are based on reasonable and prudent judgment. International accounting standards have been followed in preparation of financial statements and any departure there from has been adequately disclosed.

The system of internal control is sound in design and has been effectively implemented and monitored. There are no significant doubts upon the companies ability to continue as going concern. There has been no material departure from the best practice of corporate governance as detailed in the listing regulations.

An audit committee is a subcommittee of a corporations board of directors that selects the firms external auditors.

The committee is also responsible for reviewing its own companys business activities to identify inefficiencies, reduce costs, and otherwise achieve organizational objectives.

Monitor the integrity of the companys financial reporting process and system of internal controls regarding finance and accounting matters. Appoint the companys independent auditors engaged to prepare audit reports or to perform other audit, review or attest services related to the companys financial statements and reports, and monitor their independence and oversee their performance. Resolve any disagreement between management and the independent auditors, management, and the Board of Directors. Review the companys practices and policies with respect to the identification, evaluation and management of material risks related to its financial reporting.

Internal auditors are the professionals with an in-depth understanding of the business culture, system, and processes who perform the internal audit activity.

The internal audit activity provides assurance that internal controls in place are adequate to mitigate the risks, governance processes are effective and efficient, and organizational goals and objectives are met.

An external auditor is an audit professional who performs an audit on the financial statements of a company, government, individual, or any other legal entity or organization, and who is independent of the entity being audited. The primary role of external auditor is to express an opinion on whether an entitys financial statements are free of material misstatements

The internal auditors are part of the organization. Their objectives are determined by professional standards, the board, and management. Their primary clients are management and board. External auditors are not part of the organization, but are engaged by it. Their objectives are set primarily by statute and their primary client-the board of directors.

discuss common interest; benefit from their complimentary skills, areas of expertise, and perspective; gain understanding of each others scope of work and methods; discuss audit coverage and scheduling to minimize redundancies; provide access to reports, programs and working papers; and jointly assess areas of risks.