ROLE OF BOARD OF
DIRECTORS IN CORPORATE
BY: KANIKA BANSAL(1174)
CG refers to the way a corporate entity is governed. It is concerned with structures and processes for decision making, accountability, control and behaviour at the top level of the company. It is an interaction between shareholders, board of directors and companies management in shaping company’s performance.
Board of Directors (BOD)
Directors are the person appointed to direct and supervise the affairs of the company. As per section 2(34) of the Companies Act 2013 director means a director appointed to the board of a company.
Role of the Board of Directors :
o To establish corporate objects including vision, mission and values of the company.
o To develop, review, guide board strategy of the company.
o To establish the company’s governance practices and making changes as needed.
o To set performance objectives, monitor corporate performance; oversee major capital expenditures, acquisitions and divestitures; to raise funds for the activities of the company including issuance of shares and other securities; and to review and guide expansion and diversification of business of the company.
o Selecting, compensating, monitoring and when necessary
replacing chief executive officer (CEO) and other key executives and overseeing succession planning. Board is responsible to
ensure that the company has a very skillful and competent CEO and an executive team to implement strategies.
o To provide an ultimate direction to the company.
o To monitor and evaluate the implementation of the policies, strategies and business plans.
o To act as custodian of assets of the company and add value to those assets.
o To ensure that the company has adequate information, internal control and audit system in place to meet the business objectives . Board has to ensure the integrity of company’s accounting and financial reporting systems.
o To ensure the company’s compliance with all the applicable laws and its own ethical standards.
o To ensure that the communication with all the stakeholders is effective.
o To monitor the relationship with all the stakeholders by effectively communicating with them and there by to enhance the image of the company.
• Enron was formed in 1985 by Kenneth Lay after merging the natural gas pipeline companies of Houston Natural Gas and
Inter North. Fortune named Enron "America's Most Innovative Company" for six consecutive years.
At the end of 2001, it was revealed that its reported financial condition was sustained substantially by an institutionalized, systematic, and creatively planned accounting fraud, known
since as the Enron scandal. Enron has since become a wellknown example of willful corporate fraud and corruption.
Failure of Board of Directors
• In it’s 2000 review of best corporate boards , Chief Executives included Enron among its top five boards. Collapse of Enron
may be constructed as failure of corporate governance in
particular the board of directors of Enron.
• The board failed miserably in its oversight responsibility. • The board had no idea what executives were doing.
• The directors failed to understand the related party
transactions between Enron and SPEs.
• The board flawed in implementing proper system of control and risk management.
Satyam Computer Services Ltd. was founded in 1987 by Mr. Ramalinga Raju and his brother Rama Raju to develop software's and provide consultancy services to large corporations.
It debuted on the Bombay Stock Exchange in 1991 followed by New York Stock Exchange in 2001.
In 2008, company received 'The Golden Peacock Award' for excellence in CG and by the end of the year it became forth largest IT company of India, claiming to surpass $2 billion in revenue and about 53000 employees.
In mid-December 2008, Satyam announced...
Bibliography: Corporate Governance & Social Responsibility, Author-DR.
Anil Kumar, Jyotsana Rajan Arora
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