Corporate Governance Forums – Governance, Risk Management, Compliances and Ethics Important Questions
Question 1.
Describe briefly the following; Enumerate any six corporate governance forums worldwide, which are instrumental in promoting the culture of creativity and compliance among corporate.
Answer:
Following are six corporate governance forums worldwide, which are instrumental in promoting the culture of creativity and compliance among corporates:
1. Global Corporate Governance Forum (GCGF) – GCGF is an OECD World Bank initiative. Its mission is helping countries improve the standards of governance for their corporations, by fostering the spirit of enterprise and accountability, promoting fairness, transparency and responsibility.
2. Asian Corporate Governance Association (ACGA) – ACGA is an independent, non-profit membership organisation dedicated, to working with investors, companies and regulators in the implementation of effective corporate governance practices throughout Asia. ACGA was founded in 1999 from a belief that corporate governance is fundamental to the long-term development of Asian economies and capital markets.
3. Common Wealth Association of Corporate Governance (CACG) – CACG was established in 1998 with the objective of promoting the best international standards on corporate governance throughout the Commonwealth as a means to achieve global standards of business efficiency, commercial probity and effective economic and social development.
4. International Corporate Governance Network (ICGN) – ICGN is a non-profit company limited by guarantee under the laws of England and Wales. It has four primary purposes:
- To provide an investor led network for the exchange of views and information about corporate governance issues internationally.
- To examine corporate governance principles and practices.
- To develop and encourage adherence to corporate governance standards and guidelines.
- To generally promote good corporate governance.
5. European Corporate Governance Institute (ECGI) – The ECGI was founded in 2002. It has been established to improve corporate governance through fostering independent scientific research and related activities.
6. Conference Board – The conference Board was established in 1916 in USA. The conference Board is a non-profit organization. The conference Board creates and disseminates knowledge about management and the market place to help businesses strengthen their performance and better serve society.
Question 2.
Write short note on the following; ICSI Motto, Vision Statement and Mission Statement.
Answer:
According to the Institute of Company Secretaries of India – “Corporate Governance is the application of best management practices, compliance of law in true letter and spirit and adherence to ethical standards , for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.”
Following is the ICSI Motto, Vision Statement and Mission Statement-
- Motto of ICSI – Speak the Truth, Abide by the Law”
- Mission statement of ICSI – “To develop high calibre professionals facilitating good Corporate Governance”.
- Vision statement of ICSI – “To be a global leader in promoting Good Corporate Governance”
Question 3.
Describe briefly the following; ICSI initiatives towards corporate governance.
Answer:
The vision of ICSI is to be a global leader in development of professionals specializing in Corporate Governance. For promoting good corporate governance the mission of ICSI is to continuously develop high calibre professional ensuring good corporate governance and effective management and to carry out proactive research and development activities for protection of interest of all stakeholders thus contributing to public good.
Following are the initiatives by ICSI towards corporate governance:-
| Initiatives | OBJECTIVE |
| Corporate Governance Research and Training | ICSI has set up the ICSI – Centre for Corporate Governance Research and Training (CCGRT) with the objective of fostering and nurturing research initiatives among members of the Company Secretaries profession and other researchers. |
| ICSI National Award for Excellence in Corporate Governance | These awards were instituted by the ICSI in 2001 to identify, foster and reward the culture of evolving global best practices of corporate governance among Indian companies. |
| Focus on Corporate Governance in the Course Curriculum | Considering corporate governance as core competency of Company Secretaries, education and training for Company Secretary significantly focuseson corporate governance. One full paper on Corporate Governance titled “Governance, Risk Management, Compliances and Ethics” forms part of the syllabus in the Professional Programme. |
| PMQ Course in Corporate Governance | ICSI has launched a Post Membership Qualification Course in Corporate Governance to enable its members gain acumen, insight and thorough expertise in corporate governance. |
| Secretarial Standards | As a pioneering initiative, ICSI issues Secretarial Standards to integrate, harmonise and standardise the diverse secretarial practices prevalent in the corporate sector.
SS-1 : Secretarial Standard on Meetings of the Board of Directors SS-2 : Secretarial Standard on General Meetings |
(Note: The above list is inclusive and not exhaustive)
Question 4.
Discuss the principles of corporate governance evolved by the institute of company secretaries of India.
Answer:
ICSI has defined Corporate Governance as: “The application of best management practices, compliance of law in letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.”
From the aforesaid definition the following principles of corporate governance are evolved by the Institute of Company Secretaries of India:
- Sustainable development of all stakeholders : To ensure growth of all individuals associated with or effected by the enterprise on sustainable basis.
- Discharge of Social responsibility : To ensure that enterprises is acceptable to the society in which it is functioning.
- Application of best management practices : To ensure excellence in functioning of enterprise and optimum creation of wealth on sustainable basis.
- Compliance of law in letter and spirit : To ensure value enhancement for all stakeholders, guaranteed by the law for maintaining socio-economic balance.
- Adherence to ethical standards : To ensure integrity, transparency, independence and accountability in dealings with all stakeholders.
Question 5.
Write a brief note on “The ICSI National Awards for Excellence in Corporate Governance”.
Answer:
“ICSI National Award for Excellence in Corporate Governance” was instituted by the ICSI in the year 2001 in pursuit of excellence and to identify, foster and reward the culture of evolving globally acceptable standards of corporate governance among Indian companies.
Objective of Award:
The underlying guideline for the Corporate Governance Award is to identify the corporates, which follow the best corporate governance norms in letter and spirit. The institution of the Award aims at promoting the cause of Corporate Governance by:
- Recognizing leadership efforts of corporate boards in practicing good corporate governance principles in their functioning.
- Recognizing implementation of innovative practices, programs and projects that promote the cause of corporate governance.
- Enthusing the corporates in focusing on corporate governance practices in corporate functioning.
Implementation of acknowledged corporate governance norms in letter and spirit.
Attributes for bestowing the award – The Institute annually bestows upon a corporate leader the “ICSI Lifetime Achievement Award for Translating Excellence in Corporate Governance into Reality”.
This award is bestowed upon keeping in view the following attributes:
- Outstanding contribution to social upliftment and institution building.
- Exemplary contribution in enhancement of stakeholders’ value.
- A visionary with innovative ideas.
- Long tradition of trusteeship, transparency and accountability.
- Qualities of leadership, team spirit, integrity and accountability.
- Proven track record of adherence of statutory obligations.
- Social acceptance and approval.
Question 6:
You being the company secretary of Adherence Ltd. are asked by the board to prepare a note on the attributes which the institute annually looks 5 for; before it bestows upon the or the corporate leader the ICSI lifetime S Achievement award for translating excellence in corporate governance § into reality.
Answer:
To,
The Board of Directors
Adherence India Limited
Subject: Attributes for obtaining ICSI Lifetime Achievement Award for Excellence in Corporate Governance
Respected Sir,
The Institute annually bestows upon a corporate leader the “ICSI Lifetime Achievement Award for Translating Excellence in Corporate Governance into Realitf.
This award is bestowed upon keeping in view the following attributes:
- Outstanding contribution to social upliftment and institution building
- Exemplary contribution in enhancement of stakeholders’ value
- A visionary with innovative ideas
- Long tradition of trusteeship, transparency and accountability
- Qualities of leadership, team spirit, integrity and accountability
- Proven track record of adherence of statutory obligations
- Social acceptance and approval
Sd/.
Mr. X
Company secretary Adherence Ltd.
Question 7.
Write short note on the following; National Foundation for Corporate Governance.
Answer:
Formation of NFCG – “National Foundation -for Corporate Governance” was set up in the year 2003 with the goal of promoting better corporate governance practices in India, by the Ministry of Corporate Affairs, Government of India along with Confederation of Indian Industry (CII), Institute of Company Secretaries of % India (ICSI) and Institute of Chartered Accountants of India (ICAI).
Stakeholders in NFCG have been expanded with the inclusion of Institute of Cost Accountants of India and the National Stock Exchange of India Ltd.
Vision of NFCG – “The vision of NFCG is to be the Key Facilitator and Reference Point for highest standards of Corporate Governance in India.”
Objective of NFCG – NFCG endeavours to build capabilities in the area of research in corporate governance and to disseminate quality and timely information to concerned stakeholders. It works to foster partnerships with national as well as international organisations.
Governing Structure of NFCG – The internal governance structure of NFCG consists:
- Governing Council : Works at the apex level for policy making.
- Board of Trustees : Deal with the implementation of policies and pro-grammes and laying down the procedure for the smooth functioning.
- Executive Directorate : Provides the internal support to NFCG activities and implements the decisions of the Board of Trustees.
Question 8.
Explain the following; mission of National Foundation for Corporate Governance.
OR
With the goal of promoting better corporate governance practices in India, the government of India has set up national foundation of corporate governance (NFCG). Explain in brief the mission of NFCG.
Answer:
National Foundation of Corporate Governance was formed with the goal of promoting better corporate governance practices in India. Following are the mission of National Foundation of Corporate Governance:
- To foster a culture of good corporate governance.
- To create a framework of best practices, structure, processes and ethics.
- To reduce the existing gap between Corporate Governance framework & actual compliance by corporates.
- To facilitate effective participation of different stakeholders.
- To catalyse capacity building in new emerging areas of Corporate Governance.
Question 9.
Prepare a brief note on National Foundation for Corporate Governance z (NFCG) and Board of Trustees of NFCG.
Answer:
National Foundation for Corporate Governance (NFCG) With the goal of promoting better corporate governance practices in India, the – Ministry of Corporate Affairs, Government of India, has set up National Foundation for Corporate Governance (NFCG) along with Confederation of Indian Industry (CII), Institute of Company Secretaries of India (ICSI) and Institute of Chartered Accountants of India (ICAI). In the year 2010, stakeholders in NFCG have been expanded with the inclusion of Institute of Cost Accountants of India and the National Stock Exchange of India Ltd.
The Vision of NFCG is “Be the Key Facilitator and Reference Point for highest standards of Corporate Governance in India.” The internal governance structure of NFCG consists of Governing Council, Board of Trustees and Executive Directorate.
Board of Trustees – Board of Trustees deal with the implementation of policies and programmes and lay down the procedure for the smooth functioning. It is chaired by Secretary, Ministry of Corporate Affairs, Government of India.
The members of the Board of Trustees are:
- Director General, Confederation of Indian Industry (CII)
- Secretary, Institute of Chartered Accountants of India (ICAI)
- Secretary, Institute of Company Secretaries of India (ICSI) and
- Secretary, The Institute of Cost. Accountants of India (ICAI-CMA)
- Representative, National Stock Exchange (NSE)
- Director General & CEO, Indian Institute of Corporate Affairs (IICA)
Question 10.
Describe how the OECD principles of corporate governance helped in evolution and development of corporate governance.
Answer:
The Organisation for Economic Co-operation and Development (OECD) is one of the first non-government organizations to spell out the principles «, that govern corporates. It was established in 1961 when 18 European z countries plus the United States and Canada joined forces to create an S organisation dedicated to economic development.
Mission of OECD – The mission of the Organisation for Economic Co-operation and Development (OECD) is to: “Promote policies that will improve the economic and social well-being’ of people around the world.”
Objective of OECD:
The OECD works with governments to understand what drives economic, social and environmental change. It measures productivity and global flows of trade and investment analyse and compare data to predict future trends, set international standards on a wide range of things, from agriculture and tax to the safety of chemicals etc.
The OECD had focused on helping governments around the world to:
- Restore confidence in markets and the institutions that make them function.
- Re-establish healthy public finances as a basis for future sustainable economic growth.
- Foster and support new sources of growth through innovation, environmentally friendly ‘green growth’ strategies and the development of emerging economies.
- Ensure that people of all ages can develop the skills to work productively and satisfyingly in the jobs of tomorrow.
Question 11.
Organization for economic co-operation and development (OECD) defines corporate governance as a system by which business corporations are directed and controlled. In the light of this statement, enumerate the principles of corporate governance as evolved by OECD.
OR
Discuss in brief the following; OECD was the first organization to spell out the principles of good corporate governance.
OR
Briefly explain OECD principles of corporate governance.
OR
The organization of economic co-operation and development (OECD) was established in 1961. The OECD was one of the first non government organizations to spell out the principles that should govern corporate. What are the existing OECD principles of corporate governance?
Answer:
Organization for economic co-operation and development (OECD) has laid down principles that govern corporates.
Principles of OECD published in 1999 – The OECD Principles of Corporate Governance were first published in 1999. These principles have become an international benchmark for policy makers, investors, corporations and other stakeholders worldwide.
Revised Principles of OECD published in 2004 – The original principles of OECD published in 1999 were revised in 2004. The revision of the original principles was done to take into account the developments and the corporate governance scandals highlighted the need for improved standards. It was recognized that the integrity of the stock market was critical and to the revised principles were designed to underpin this integrity.
Revised Principles of OECD published in 2015 – The 2004 version of the Principles were again revised in 2015. OECD Corporate Governance Principles are divided in six different chapters, which are:
- Principle 1: Ensuring the basis for an effective corporate governance framework
- Principle 2: The rights and equitable treatment of shareholders and key ownership functions
- Principle 3: Institutional investors, stock markets, and other intermediaries
- Principle 4: The role of stakeholders in corporate governance
- Principle 5: Disclosure and transparency
- Principle 6: The responsibilities of the board
Question 12.
“The Global Corporate Governance Forums mandate is to promote global, regional and local initiatives that improve corporate governance policy standards and practices in developing countries”. Elucidate this statement.
OR
Explain the focus areas of Global Corporate Governance Forum.
Answer:
Global Corporate Governance Forum is an OECD World Bank initiative. Its mission is helping countries improve the standards of governance for their corporations, by fostering the spirit of enterprise and accountability, promoting fairness, transparency and responsibility.
Objective of Global Corporate Governance Forum:
Global Corporate Governance Forum was established to promote initiatives to raise corporate governance standards and practices in developing countries and emerging markets, using the OECD Principles of Corporate Governance as the basis for its work in 1999.
The focus areas of the Forum are as follows:
- Raising awareness and building consensus for implementation of reform through meetings, briefings, policy papers, and conferences.
- Sponsoring research relevant to the needs of developing countries to underpin reform efforts by sound analysis through sponsoring papers and building sustainable networks for academics in developing countries.
- Disseminating best practice materials and publications and guidelines developed with leading global specialists and practitioners.
- Supporting institution and capacity building and providing technical assistance to ensure implementation at the field level through training programs, toolkits and other direct assistance.
Question 13.
Briefly discuss the scope of work of the international corporate governance network (ICGN).
OR
Describe the role of international corporate governance network (ICGN) governed by the ICGN memorandum and article of associations.
OR
With what mission, International Corporate Governance Network (ICGN) was incorporated? Describe the purpose of the ICGN.
Answer:
The International Corporate Governance Network( “ICGN’) is a not-for- profit company limited by guarantee and not having share capital under the laws of England and Wales founded in 1995.
ICGN’s mission is to promote effective standards of corporate governance and investor stewardship to advance efficient markets and sustainable economies worldwide.
ICGN’s positions are guided by the ICGN Global Governance Principles and Global Stewardship Principles, which were first published in 2003, as a statement on shareholder stewardship responsibilities both of which are implemented by:
Influence policy by providing a reliable source of investor opinion on governance and stewardship.
Connect peers at global events to enhance dialogue between companies and investors around long term value creation.
Inform dialogue through education to enhance the professionalism of governance and stewardship practices.
Membership of ICGN – Membership of ICGN is open to those who are committed to the development of good corporate governance. The Membership section explains the benefits of membership, the different types of membership and how to join the ICGN. The Institute of Company Secretaries of India is a member of ICGN.
It has four primary purposes:
- To provide an investor-led network for the exchange of views and information about corporate governance issues internationally.
- To examine corporate governance principles and practices.
- To develop and encourage adherence to corporate governance standards and guidelines.
- To generally promote good corporate governance.
Question 14.
How academicians legislators and professionals are joining hands to improve the corporate scenario throughout the affected world.
Answer:
Academicians, Legislators and Professionals are joining hands throughout the world to improve corporate scenario. World over, a consultative stakeholder centric approach is being adopted before introducing any new law or regulation. Companies are encouraged to be more self-governed and professionals are being tasked with ensuring the compliance of laws. Various of profit and non-profit associations are working in order to ensure good corporate performance.
European Corporate Governance Institute (ECGI) – The European Corporate Governance Institute (ECGI), an International Scientific Non-Profit Association has been established to improve Corporate Governance through fostering independent scientific research and related activities.
It emphasizes on:
- Providing a forum for debate and dialogue between academicians, legislators and practitioners, focusing on major Corporate Governance issues and thereby promoting best practice.
- Advising on the formulation of Corporate Governance policy and development of best practice and undertakes any other activity that will improve understanding and exercise of corporate governance.
- Acting as a focal point for academicians working on Corporate Governance in Europe and elsewhere, encouraging the interaction between the different disciplines such as Economics, Law, Finance and Management.
Question 15.
Describe briefly the following; scope of work of the Asian Corporate Governance Association.
OR
What is Asian Corporate Governance Association (ACGA)? Discuss the scope of work in ACGA.
Answer:
The Asian Corporate Governance Association (ACGA) is an independent, non-profit membership organisation dedicated to working with investors, companies and regulators in the implementation of effective corporate governance practices throughout Asia.
Formation of ACGA : ACGA was founded in 1999 from a belief that corporate governance is fundamental to the long-term development of Asian economies and capital markets. It was founded by a network of sponsors and corporate members, including leading pension and investment funds, other financial institutions, listed companies, multinational corporations, professional firms and educational institutions.
It is incorporated under the laws of Hong Kong and is managed by a secretariat based there. Its governing Council comprises directors from around Asia.
Scope of work of ACGA – ACGA’s scope of work covers three areas:
- Research: Tracking corporate governance developments across 11 markets in Asia and producing independent analysis of new 3 laws and regulations, investor activism and corporate practices.
- Advocacy: Engaging in a constructive dialogue with financial regulators, stock exchanges and institutional investors and companies on practical issues affecting the regulatory environment and the implementation of better corporate governance practices in Asia.
- Education: Organizing conferences and seminars that foster a deeper understanding of the competitive benefits of sound corporate and ways to implement it effectively.
Question 16.
The IIRC seeks to build upon, enhance and support the work that has been done to date, and is ongoing, to achieve a reporting framework. Elucidate.
Answer:
The IIRC seeks to build upon, enhance and support the work that has been done to date, and is ongoing, to achieve a reporting framework that:
- Communicates the organization’s strategy, business model, performance and plans against the background of the context in which it operates.
- Provides a coherent framework within which market and regulatory driven reporting requirements can be integrated.
- Is internationally agreed, so as to encourage convergence of approach and hence more ready understanding of information presented.
- Reflects the use of and effect on all of the resources and relationships or “capitals” (human, natural and social as well as financial, manufactured and intellectual) on which the organization and society depend for prosperity.
- Reflects and communicates the interdependencies between the success of the organization and the value it creates for investors, employees, customers and, more broadly, society.