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Company Law > 1. Corporate Governance > Flashcards

1. Corporate Governance Flashcards

1
Q

What is CG?

A

Process of supervision and control to ensure that company mgmt acts in interest of stakeholders

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2
Q

Objectives of CG

A
  1. transparency
  2. participation
  3. legal adherance
  4. effectiveness
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3
Q

Need for CG

8 points

A
  1. Inc investor trust
  2. Inc in global market share
  3. inv in enterprise valuation
  4. inc in financing from institutions
  5. inc in accountability
  6. reduction in risk of scandals
  7. combat competition
  8. improves corporate performance
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4
Q

Requirements to strengthen CG

BAADE RAM
8 points

A
  1. Bankruptcy Law
  2. Accountability of Board
  3. Audit
  4. Director independence
  5. Inc in efficiency
  6. Report on CG
  7. Awareness.
  8. Rights of minority shareholders
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5
Q

Why is CG benefecial

FCB ESP
6 points

A
  1. inc in fin performance
  2. cost reduction
  3. improves brand image
  4. attracts employees
  5. inc sales
  6. improves productivity and quality
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6
Q

Features of CG

6 points

MCB SVS

A
  1. Const of commitee
  2. Monitor strategic decisions
  3. board system and procedures
  4. SH democracy
  5. Value orientation
  6. Structure of board
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7
Q

OECD guidelines

A
  1. Effective legal and regulatory framework
  2. Equal treatment of shareholders
  3. Transparency and disclosures
  4. Relations with stakeholders
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8
Q

Core elements of CSR policy

A
  1. Care for all stakeholders
  2. Ethical functioning
  3. Respect for workers rights and welfare
  4. Respect for Woman rights
  5. Respect for environment
  6. Activities for social and inclusive development
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9
Q

Difficulties faced by PSU

4 points

A
  1. Board of directors-bureaucrats-decision making diff
  2. Directors- not professionals- no expertise- efficiency
  3. Dif- to attract experts- limitations- impact
  4. Diff- implement gov practices-pol int- sick units
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10
Q

Key features of Kumar Manglam Birla Commitee

A
  1. Audit committee
  2. Freq of meetings and quorom
  3. Independent and Nominee directors
  4. Disclosure of material events
  5. Disclosure of price sensitive info
  6. Declaration of quarterly results
  7. Providing info in DIR reg utilisation of funds
  8. Appt of compliance officer
  9. Strengthening disclosure norms for IPO
  10. Copy of abridged balance sheet to shareholders
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11
Q

Cadbury Report (1992)

7 points

A
  1. Scandals-FRC,LSE, - Committee on Fin Asp ,CG
  2. Chaired my Adrian Cadbury-reported-Dec 1992
  3. Operation of main board
  4. Est, Comp and Operation of key board committees
  5. imp and cont of non exec directors
  6. reporting and control mechanisms
  7. code of best practises- comply or explain - UK comp
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12
Q

Greenbury Report (1995)

5 points

A

1, size of rem package-inconsistent and incomplete disclosure- annual reports

  1. discussion- how much- how useful- diclosures
  2. focus on public ltd companies
  3. strengthening acc and perf of directors
  4. achieved by- rem comm , perf rewards
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13
Q

Hampel Report ( 1998)

6 points

A
  1. review - cadbury and greenbury
  2. extent-consider-stakeholders-
  3. dir- accountable to SH, resp for relation with SH
  4. meet- legal duties-long term sh value- stk relations
  5. emphasized role of inst investors
  6. inst investor-think- vote resolutions- no box ticking
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14
Q

Benefits of sustainability reporting

TRC - 4 points

A
  1. transparency and accountability
  2. reputation and brand value
  3. competitive advantage
  4. legitimating of corp activities
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15
Q

Issues regarding MoU system in CPSE

A
  1. Impact of external environment
  2. Scientific setting of base target
  3. Lack of MoU as business review tool
  4. Lacks the ability to foster CG
  5. PSU lack in CSR initiative
  6. Exisiting balanced scorecard not suitable
  7. Lack of ability to introduce new products
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16
Q

Risk and uncertainty in WLCC

11 points

A
  1. Dynamic, ongoing process-stochastic assesment
  2. Constructed facility- feasability to disposal
  3. Complex decisions- multi objectives and alternatives
  4. Long term impacts-numerous disc and dec makers
  5. Project cost, design, op dec parameters est early
  6. No robust framework-risk,decisions- eval process
  7. Building related inv- uncertainty-costs and savings
  8. Uncertainty- input- actual outcomes-diff- established
  9. Tech for est cost of wrong project
  10. Deterministic tech - sensitivity and break even
  11. Probabilistic tech- quantify risk exp- prob
17
Q

German CG

9 points

A
  1. Insider, dual board system
  2. Mgmt board and supervisory board
  3. mgmt board- managing enterprise
  4. chairman co-ord mgmt board- resp for mgmt of ent
  5. sup board- appmt,supervise, advise mgmt board
  6. sup board- decisions of fundamental imp to ent
  7. members of sup board elected by SH directly
  8. 1/3 or 1/2 of employee in sup board
  9. emp rep- not good- hold back decisions-
  10. interest of comp>employees eg: closing factory
18
Q

Japan CG

8 points

A
  1. bubble- burst- SH lost wealth, banks problems
  2. govt- confidence- banks,stocks,FDI,growth- CG
  3. banks-influence-both german and japan
  4. Chakram- obligation, family and consensus
  5. JCGC- Revised CG Code- 2001
  6. TSE- Princples of CG for LS- 2004
  7. banks replaced- struct boards-resp auditors-act SH
  8. Six areas of improvement- SH as owners,utilising capital effeciently, Independent supervision, Pre emption rights, Poison pills , take over defence, SH voting and meeting
19
Q

Corporate Citizenship

4 points

A
  1. Business strategy -shapes values-mission-choices- executives,managers,employees-engage-society
  2. Minimize harm-Maximize benefit- Be accountable– Support strong fin results.
  3. focus- membership of corp in pol,soc,cul community
  4. focus on delivering key message- CSR and CC

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