1 / 26

THE BENEFITS OF IMPROVED CORPORATE GOVERNANCE PRESENTED BY MERVYN E KING S.C.

THE BENEFITS OF IMPROVED CORPORATE GOVERNANCE PRESENTED BY MERVYN E KING S.C. Structure of Talk. Improved = good What is good corporate governance? What does practising CG guidelines achieve? What are the benefits of doing so?. Corporate Governance.

vesna
Download Presentation

THE BENEFITS OF IMPROVED CORPORATE GOVERNANCE PRESENTED BY MERVYN E KING S.C.

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. THE BENEFITS OF IMPROVED CORPORATE GOVERNANCE PRESENTED BY MERVYN E KING S.C.

  2. Structure of Talk • Improved = good • What is good corporate governance? • What does practising CG guidelines achieve? • What are the benefits of doing so?

  3. Corporate Governance • How is a company directed and controlled – standard definition. • Company directed by its directors • Controlled by its shareholders • How do directors direct? • How is the business of a company controlled?

  4. A director’s duties - responsibilities • Good faith • Care • Skill • Diligence

  5. Incapacitated person • Human being • Best interests, care, skill, diligence • Decent citizen thing to do • Company an artificial citizen • Incapacitated • Director, heart, mind and soul.

  6. Corporate Governance about process • Process to discharge and be seen to be discharging those responsibilities • Outsiders • Information needed to invest, supply etc • Quality of information.

  7. Codes • Cadbury, Greenberg, Hampel • Higgs, Smith, King, Bosch, Dey • Sarbanes/Oxley Act • NYSE and Nasdaq listing requirements • OECD principles • Commonwealth principles • GRI, SRII, GRI • Winter in the EU • Mauritius, Kenya, Malaysia, Hong Kong • ASX and NZSX

  8. Can Code avoid failure? • Governance about process • Enterprise – strategic • Risk for reward – failure • Good governance and failure • Acceptable • Bad governance – failure - scandal • Not acceptable.

  9. Business • An ethical enterprise • Uncertain future events • Comply or explain • Comply or else • Rules vs principles • King vs Sabannes Oxley.

  10. Compliance • Mindless • Compliance officer • Apply mind • Not suitable for business • Explain • Market ultimate compliance officier.

  11. Enron • Had the trappings of good governance • Quantitatively complied • Non executives • Good board attendance • Committees of board • Yet dysfunctional.

  12. Enron – Why? • Self interest • Greed • Dishonest – 900 SPE’s • Appears to prop up share price • Codes will not help • Failure to discharge good faith, care, skill and diligence.

  13. Critical issues in Enron • Lack of quality governance • Failure of performance and conformance • Scandal • Confusion director/manager role.

  14. Qualitative Governance • Not a recording machine • Past prejudices • Present needs • Conscious that one must practise qualitative and not quantitative alone • Intellectual honesty.

  15. How to Practise Qualitative Governance • Exercise of intellectual honesty • Directors can learn • Directors must practise • Eight questions • All on one foundation.

  16. Question One • Is there any conflict? • Duty of good faith.

  17. Question Two • Do I have all the facts to enable me to make a decision? • Duty of care • Duty of skill • Duty of diligence.

  18. Question Three • Is this a rational business decision based on all the facts? • Duty of care • Duty of skill • Duty of diligence.

  19. Question Four • Is the decision in the best interests of the company? • Duty of good faith • Duty of care • Duty of skill.

  20. Question Five • Is the communication to stakeholders transparent? • Duty of good faith • Duty of care • Duty of skill • Sunlight best disinfectant • Electric light best policeman • Withering effect on misconduct.

  21. Question Six • Is the company acting in a socially responsible manner? • Duty of care • Duty of Skill • Duty of diligence.

  22. Question Seven • Am I acting as a good steward of the company’s assets? • Duty of care • Duty of skill • Duty of diligence.

  23. Question Eight • Would the board be embarrassed if its decision and the process employed in arriving at its decision appeared on the front page of a national newspaper? • Duty of care.

  24. Benefits of qualitative governance • Downturn – support of stakeholders • Quicker turnaround • Sustainability – NFA’s • Attract better employee • Cheaper capital • No scandal on wrong business judgment call • Company’s reputation.

  25. Quality is the measure • Intellectual honesty • Immutable • Company, inanimate and immortal • IH starts and ends in boardroom.

  26. Conclusion • Profit with intellectual honesty is the essence of good governance • Good governance can be practised by being aware of the four common law duties and by constantly asking oneself the eight questions. • A journey not a destination • But the benefits are enormous.

More Related