BHARATI VIDYAPEETHS INSTITUTE OF MANAGEMENT

1
BHARATI VIDYAPEETHS INSTITUTE OF MANAGEMENT
RESEARCH, DELHI

• Event

Management Development
Topic
Corporate Governance
Presentation by
Prof. Dr. Khawaja Amjad Saeed
Founder Principal, Hailey College of Banking
Finance, University of the Punjab, Lahore
Pakistan (2003----), Member Governing Council,
International Federation of Accountants (IFAC),
New York (1997-2000), President, South Asian
Federation of Accountants (SAFA) (1997),
President, Institute of Cost and Management
Accountants of Pakistan (1997-2000), President,
Association of Management Development
Institutions of South Asia (AMDISA) (1993-96),
Pro Vice-Chancellor University of the Punjab,
Lahore (1994-1996), Founder Director, Institute
of Business Administration (IBA), University of
the Punjab, Lahore (1973-1996). Cell 0333-4363363
2
CORPORATE GOVERNANCE
WELCOME TO OUR PROGRAM
PRESENTATION FRAME

• Concept
• Central Concerns
• Experiential Learning
• United Kingdom
• Asia
• Africa
• Fundamental Principles of Corporate Governance
• The Seven Principles of Public Life

3
1. CONCEPT

• OECD
• Corporate Governance Comprehends that structure
  of relationship and corresponding
  responsibilities among a core group consisting
  of
• - Shareholders
• - Board Members
• - Corporate Managers
• Designed to best poster the competitive
  performance required to achieve the corporations
  primary objective.

4
2. CENTRAL CONCERNS

• Role of BOD
• Its Structure
• Pattern of Remuneration
• Issues of Directors Ownership
• Degree of Freedom and Enterprise Available to
  the Board
• Role of Institutional Directors
• Accountability of Board for its Actions

5
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

1. Cadbury Committee

• Four Major Areas
• Board of Directors (BOD)
• Non-Executive Directors
• Executive Directors
• Reporting Controls
• (1) BOD

6
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

1. Cadbury Committee
7
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

1. Cadbury Committee

• 2. Non-Executive Directors
• Contribution areas
• Indendent Judgment
• Focus
• Strategy Performance
• Key Appointments
• Standards of Conduct
• Fairness Independence
• - Independent of Management
• - Fee----Time Commitment
• - Appointment for Specified Terms
• - Reappointment not Automatic

8
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

1. Cadbury Committee

• 3. Executive Directors
• Contract 3 years
• Formal Approval
• Through the Board as a whole
• Emoluments
• Transparent disclosure
• Pension Contributions Stock Options
• Salary Performance related Elements with Basis
  of Measurement

9
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

1. Cadbury Committee

• 3. Executive Directors
• Remuneration Committee
• Recommend Pay and Executive Director
• Composition Wholly or mainly of non-executive
  directors

10
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

1. Cadbury Committee
4. Reporting Controls
11
3. EXPERIENTIAL LEARNING

• UNITED KINGDOM

2. Hampel Committee 1995

• Report released in January 1998
• Scope
• Principles of Corporate Governance
• Application of Principles
• The Future
• Directors
• Directors Remuneration
• Shareholders the AGM
• Recommendations

12
3. EXPERIENTIAL LEARNING

• ASIA

• Hong Kong
• Malaysia
• Pakistan
• India
• (Satyam Computer Services, Hyderabad Deccan)

13
3. EXPERIENTIAL LEARNING

• ASIA

1. Hong Kong
I Accounting Profession-Impact of
U.K II Working Groups - Report on Corporate
Governance 1995, reprinted 1996 - Second
Report January 1997 III Exclusive Story
- Theme Corporate Governance - Released by
HKSA October, 1996
14
3. EXPERIENTIAL LEARNING

• ASIA

1. Hong Kong
IV Ten-Point Code
15
3. EXPERIENTIAL LEARNING

• ASIA

2. Malaysia

• A Code of Ethics for Directors
• Five Points
• Introduction
• Principles
• Objectives
• Definition
• Code of Conduct
• - Corporate Governance
• - 12 Points

16
3. EXPERIENTIAL LEARNING

• ASIA

2. Malaysia
5. Code of Conduct - Relationship with -
Shareholders - Employees - Creditors -
Customers - Social Responsibilities and the
Environment - 5 points
17
3. EXPERIENTIAL LEARNING

• ASIA

2. Malaysia

• B Code of Ethics for Company Secretaries
• Four Parts
• Introduction
• Principles
• Objectives
• Code of Conduct
• - 5 Points

18
3. EXPERIENTIAL LEARNING

• ASIA

2. Malaysia

• C Publications
• Above Publications wereReleased by
• Registry of Companies
• Ministry of Domestic,
• Trade Consumers Affairs, 1996

19
3. EXPERIENTIAL LEARNING

• ASIA

3. Pakistan

• First Code of Corporate Governance
• SECP
• With Assistance from
• ICAP
• Stakeholders
• Sound Corporate Practices

20
3. EXPERIENTIAL LEARNING

• ASIA

3. Pakistan

• B Applicable to
• Listed Companies
• Banking Companies
• DFIs
• NBFIs
• Insurance Companies
• Mutual Funds
• Unit Trusts
• Companies/Corporations held or controlled by the
  Government

21
3. EXPERIENTIAL LEARNING

• ASIA

3. Pakistan

• C Constituents
• 1. Directors
• BOD
• Qualifications and Eligibility
• Tenure
• Responsibilities, Powers and Functions of BOD
• Meetings
• Key Information

22
3. EXPERIENTIAL LEARNING

• ASIA

3. Pakistan

• C Constituents
• 2. CFO Secretary
• Qualifications
• Attendance of Board Meetings
• 3. Corporate Financial Reporting Framework
• Directors Report to Shareholders
• Frequency of Financial Reporting
• Responsibility for Financial Reporting
  Corporate Compliance
• Disclosure of interest by a Director holding
  companys shares

23
3. EXPERIENTIAL LEARNING

• ASIA

3. Pakistan

• C Constituents
• 3. Corporate Financial Reporting Framework
• Auditors not to hold shares
• Corporate ownership structure
• Divesture of shares by sponsors/controlling
  interest
• 4. Audit Committee
• Committee
• Frequency of meetings
• Attendance at meetings
• Terms of reference

24
3. EXPERIENTIAL LEARNING

• ASIA

3. Pakistan

• C Constituents
• 4. Audit Committee
• Reporting procedure
• Internal Audit
• 5. External Auditors

25
3. EXPERIENTIAL LEARNING

• AFRICA

South Africa

• The Kings Report on Corporate Governance
• Published by The Institute of Directors in South
  Africa, November 19, 1994
• Recommendations
• Source Cadbury Report, Paragraphs 3.2-3.4

26
4. FUNDAMENTAL PRINCIPLES OF CORPORATE GOVERNANCE
A Cadbury Committee-the three key principles
and their definitions - Openness
(Transparency) - Integrity -
Accountability Source Cadbury Report,
Paragraphs 3.2-3.4
27
4. FUNDAMENTAL PRINCIPLES OF CORPORATE GOVERNANCE
B As adapted for the Public Sector in the IFAC
Study - Openness - Integrity -
Accountability Source (IFAC Study
Paragraph 065)
28
5. THE SEVEN PRINCIPLES OF PUBLIC LIFE
29
5. THE SEVEN PRINCIPLES OF PUBLIC LIFE
(Extracted from the First Report of the
Committee on Standards in Public Life, UK, May
1995)
ANY QUESTIONS THANK YOUR FOR ATTENTIVE LISTENING