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Corporate Governance Is Base for the Sound Economy

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Essay title: Corporate Governance Is Base for the Sound Economy

"Success is not the art of making mistakes when nobody is looking at, true success is the truthful expression of the performance when it is measured"*

Who does not like the progress? Progress leads to success in terms of satisfaction of desires and expectations. When any individual compares his past performance with the present and when the graph is upward then individual appreciates himself or herself. The same is in the case of corporate or country or any country's economy, which want to be sound then they need success. But success is not simple to get. Now days there are many ways through which success can be achieved. The ways can be short cuts or may be long ways, where more sincerely and ethically one has to work. Corporate governance can be put in this 2nd category.

Corporate governance has succeeded in attracting a good deal of public interest because if it's apparent importance for the economic health of corporations and society in general. We know each corporation obtains its funds from different class of investors. When they do so, it becomes their prime responsibility to see that the funds are used in proper direction. The investors are also even needed assurance for such matter.

"Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting return on their investment." *

The Cadbury committee, London, U.K. in the year 1992, is giving corporate Governance concept. But corporate governance is not new invention but was inherent characteristics of all healthy organizations.

"Corporate Governance practices and concept has been recently raised due to growing level if falls out in corporate sector leading to severe injury not only to the Stake holders but to the whole economy.

When company follows corporate governance in practice in a way it becomes transparent in every single matter related to co.'s transactions, it has to be very honest while publishing financial information, firm has to fellow guidelines specified by various institutions and bodies. Thus any matter, which involves affairs with of company, has to be clear so that it can be repressed with clarity. Actually company is accountable or answerable to its shareholders for any consequence and that is few when it has to adopt for transparent business.

There are many norms of the corporate governance, if practiced by the corporate people then it will lead to sound economy, as sound and progressing corporate units are the bases for the sound economy. At the same time corporate governance is not the luxury goods that only wealthier economy can afford but it is the base if followed by the corporate as well as by any developing country then it will contribute in the development of the economy. Different norms are related to the performance of the company as well as the directors who holds the position of the Board of the directors. Corporate governance practices are like guiding policies for corporate executives to run their business with accountability and transparency. The norm of corporate Governance practices includes various aspects, which are necessary to be followed by Board of Directors and emphasis on the Director who is holding the directorship position in the company, whether the Director is executive director, non-executive director or an independent director. It is one of the norms of the corporate governance that if the chairman of the Board is executive chairman there must be at least 50%of the Board should be of independent director, the director who is apart from receiving his remuneration does not have any materialistic relationship with the company or with director of the company and when the chairman of the board is non executive chairman then 1/3 rd of the Board should be consist of the independent director.

Corporate Governance also emphasis on the transparency aspect. "Transparency is the core aspect of corporate governance" Each and every stakeholder expects transparency from the management, because stakeholders cannot get total idea inside management practices, by just referring to the Balance sheet of the firm. They must be aware about essential aspects like how much remuneration is drawn by directors, what criteria are used by company for director's appointment and reappointment

Transparency in every single mater starting from the directors' pay scale to the number of AGM held and risk management policy followed by the company and many more… Recently the chairman of the SEBI, M. Damodaran had announced that all the listed company has to follow the norm that is required by the clause 49 of listing agreement of the Company's Act and has to follow it before December 2005. If company remains transparent in disclosure creditor's trust and corporation can be improved like.


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