Objectives Of Corporate Governance

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Corporate governance broadly refers to the mechanisms, processes and relations by which corporations are controlled and directed. Governance structures and principles identify the distribution of rights and responsibilities among different participants in corporation such as board of directors, managers, shareholders, creditors, auditors, and other stakeholders and includes rules and procedures for making decisions in corporate affairs.
Sir Adrian Cadbury Committee,1929 which looked into corporate governance issues in U.K. defines Corporate Governance “as the system by which the companies are directed and controlled. The basic objective of corporate governance is to enhance and maximize shareholder value and protect the interest of other stake holders”.
According to WorldBank,
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For unlisted company (having paid up capital of rs. 10 cr or more) – atleast two independent director .
Under section149(6)- independent director shall be a person of integrity and possess relevant expertise, has no pecuniary relationship with the company or its directors or promoter during two preceding financial yr or current financial yr
Section149(10)- ID shall not be entitled for any remuneration other than the sitting fee, expenses for participation in board meetings
A separate meeting of ID is mandatory atleast once a year without the presence of non independent directors to review the performance of the management.

2. Section151- appointment of the director elected by small shareholders( holding shares of not more than rs. 20,000 or as prescribed) to ensure the adequate investor representation of interest.

3. Section138- Internalaudit- appointment of internal auditor for some companies as prescribed to have internal audit for better internal control and corporate governance. Internal audit system in a company improves the risk management
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