CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

BY JAGADISH

corporate governance is making a huge wave across the nations and sweeping it across companies both nationally and internationally

amazing literature has been produced recently by all companies so i thought of contributing it also in this field through my experience and knowledge on this subject

best of luck to myself on this commonsense subject of corporate governance

so the story begins as to what is corporate governance. big big giants have written on corporate governance but i am not going to touch on what they think. I am going present to you what i think on this subject of corporate governance which is not copied from any source or data it is purely original thoughts of jagadish on a widely debated and likable subject of 21st century

Reference done by owner,ceo, board of directors or co owner

In corporate governance if at all their has been a reference done by owner, ceo or board of directors under recruitment division it is the responsibility of board of directors to do the interview together and given a post as selected by board of members on mutual agreement or rejection of the candidate. the one who has done the reference cannot participate in the selection of the candidate referred by him

change of ownership

ownership of company is always owner run by board of directors with ceo who is also part of board of directors list
if their arises a situation of change of ownership due to multiple reasons . this change of ownership can be decided either by owner or stakeholders or board of directors

when this situation arises change of ownership has to happen within 48 hours or if it cant be done owner has to own it till proper owner is selected. this selection proposal has to be put forward by owner and to be debated upon by board of directors as for his competence to run the administration set by owner

question now arises whether board of directors can select owner from themselves or chosen by them which are not part of owner choice. this choice cant be taken by board of directors because board of directors are actually managers managing the organization set up by owner so board of directors can direct owner to chose others if the list chosen by owner are incompetent

in case the owner dies suddenly the owner automatically is chosen as per his will so it is the owner who has to tell well in advance to board of directors as to whom he has chosen that is why co owner has to be their along with owner to run the administration approved by board of directors

incase both die together will comes into picture if that scenario is not available as to non existence of will automatically heir is chosen by government with board of directors approval

corporate governance of different countries can be different as designed by the government and monitored by government as to its implementation part

OWNER RIGHTS AND RESPONSIBILITIES

owner owns the company and board of directors run it for him . now question arises as to what is duty of an owner. an owner need not preside the board meeting but should be intimated every now and then as to the decisions taken by board through ceo . ceo should assign a CIO to owner and cio should work along with owner to do analysis of both company and industry. in times of emergency situation in company owner can be called upon by board of directors to see the decision taken and give his approval

if owner is not satisfied with board of members decisions after talking to ceo , he can issue a meeting of board of members and intimate them as to his objection regarding decision taken in the board of directors meeting and put up his proposal . but this board meeting should be done only after discussing with co owner

the board of directors have to take into consideration his proposal and pass it again in the board of directors meeting with owner presiding it . now whatever decision taken by board should be acceptable to owner . if owner feels that his point has been taken but deaccepted and he feels that necessary action regarding the company he owns hasnt been accepted owner can ask the highest justice to come and clarify the decision taken by board.

ROLE AND RESPONSIBILITY OF CO-OWNER

COowner is as powerful as owner and he also has to have his own CIO under his belt and both CIOs of owner and co owner has to have the same information and both should be in touch with each other . the responsibility of owner and co owner is same and both have to be present in times of emergency situation. it is mandatory because 2 brains are better than one brain

now question arises as to approval of decision made by board of directors . if co owner is not happy with the decision taken by board but owner is happy with the decision taken, co owner first has to report to owner and take his advice then issue a board of meeting and put up his case to be passed upon

APPROVAL OF FINANCE:

other than owners money board of directors can use the companies money for expansion of company plan. but this expansion plan has to get the approval from board of directors with stakeholders being intimated upon. stakeholders can file a complaint against company if approval is for unjust reasons. owner is not responsible for day to day activities of board of directors but would be present if emergency situation arises. as to removal of board of director or directors it is board with owner , co owner would be taken in unison.

the removal person of board member has to put up his presentation infront of company board of directors where ceo is also part of board member and his role is also important for functioning of the company or companies

ceo removal is just like any board of director removal . if entire board of directors to be removed because of proposal petition filed by the stakeholders or owner because of mismanagement or for any reason, it cant be done minimum 5 board members have to be present at any given point of time with government representative being present if company is a substantial company contributing for the stakeholders

how much money can board of directors remove from the company . 1/3rd of profit earned for operations,2/3rd of profit to be kept aside. in case of loss board of directors have to intimate to ceo, cfo, coo, cmo for removal of money

owner, co owner arent responsible for money management issues taken up by board directors, but should be intimated if money is thought by board to be huge . stakeholders meeting is mandatory in the case of huge money allotment if majority of board members think it is so . stock exchange would be affected.

owners money should never be touched without their approval . now question arises as to what owners money is being talked about. money which owner owns while owning company share.owners money should never be asked to be liquidated when liquidation of company comes into picture because owners money is not companies money . owners and co owners together money share is maximum 5% of total company share is what jagadish thinks about because owner/co owner is not running the company administration on day to day lines.

owner/co-owner can use the 5% of money for personal use but should never purchase shares of company with that. once money spent is spent , decrease of percentage of share in their company can happen but increase in percentage or buy back of shares can never take place.

owner has to be careful in spending money of 5 %. owner owns 3% and co owner owns 2% without further purchase of shares at any given point of time . passing it on to future owners , future owners also cannot purchase shares of their company but can purchase shares of other companies under their personal account.which is also applicable to owner and co owner

once liquidated stands liquidated.

money used by owner for development of company of his stands used , he cannot earn money through that investment of money. it is given to company.



united nations is what countries should be answerable in coming centuries

creditors most important in stakeholders--- the more they are debate begins



BOARD OF DIRECTORS AND THEIR POWERS THROUGH COMMONSENSE

board of directors manage the show of owner and are always under tension hence board of members can allot their own timings with mutual agreement and in a year sanction leave . only 5 members minimum have to be present at any given point of time and maximum 30. why 30 because 30 days in a month. think

board members have to have their own CIO under their belt to get news for themselves so as to have awareness about society

board of members should be rotational with taking up different posts of top management every now and then to know the developments specially in research wing of both science and management. sometimes owner makes mistakes in decision making so a unison decision of board members can override the decision taken up by owner and co owner.

if owner co owner asks for explanation a detailed report has to be sent on the spot within 48 hours regarding why that decision was taken and handed it to mail of CIO assigned to the owner through ceo with authentic signatures of 5 board members minimum biometrics . if 48 hours is not sufficient a mini statement is sufficient to be sent to CIO till a detailed report is generated

board of directors recruitment happens with ceo, cmo, cfo, coo getting a chance to become board of directors,

retirement age should be 55 as psychology of 21st century states that after 55 men, women become children or act like children

board of directors can remove any employee but it has to be incompetence and under ethics to discharge duty but minimum 3 board members should be intimated and get approval because employee has employee union who takes care of employee negligence hence if 3 minimum board members approve it can be done . if needed fine tune it.

surprise checks are mandatory to look at peak performance of employees.

owner and co owner have a right to remove only board of directors that too with other board of members approval. they cant remove employees, but negligent behavior etc can be intimated to ceo who looks into the affair and gives his report to owner co owner

if owner and co owner start removing employees board of directors cant work properly and get into friction with employee unions but with 3 board of directors approval employee can be removed by board of director with ceo approval if required.

Government:

government role as per corporate governance is through governing body of this corporate governance. they can come only through this route if emergency situation is created within a company which is contributing for the welfare of stakeholders

Government cant take percentages in shares of companies in order to exercise corporate governance if it does company would be called as a public government ruled by government

Government can be invited for discussion if board of directors with owner, co owner make a decision together with stakeholders approval that government role would benefit the company or companies managed by board of directors

ownership purchases :

owner of a company can purchase land, building etc for the company but in real practice he has to get approval from board of directors whether board is in a position to handle the purchase , owner has the capability to purchase but board of directors must be capable to manage them and discard the purchase if they cant manage

owner and co owner must intimate of purchase to board of directors if they are doing it on behalf of company. stakeholders approval is not needed on this account as it is owner co owner who have thought of expanding the company. the company should and is not liable to pay money to owner for this type ol service done by owner co owner unless it has approval from stakeholders.

For every important decision taken by board of directors a stamp paper has to be submitted to justice department approved by the representative of justice and neatly documented in the files maintained by company secretary which should be a ready reference guide to board of directors

online documentation also should be their maintained by company secretary to board of directors with CIO head also approving it of its existence

intimation to company owner by outgoing company owner

intimation to coming company owner by outgoing owner must be in accordance with law prevailing in the country to which the present owner where transaction is occuring has to be done. it has to be in stamp paper intimating with balancesheet and profit and loss duly signed by outgoing owner checked up by the government and board of directors if the company is a substantial company.

no pending cases should be their in the name of outgoing owner , till it is cleared transfer of owner cant be done even under difficult situations.



answerable to stakeholders

outgoing owner should intimate to the stakeholders with press meeting during financial year closing time only and proper documents have to be shifted to present coming owner . stakeholders must be satisfied as to the acceptance of the new owner. once it is accepted by stakeholders transfer becomes easy , if not accepted by the stakeholders proper legal notice should be submitted and approved by the court of justice with due notice given to stakeholders as to why transfer is happening and future plans to be submitted by the new owner with board of directors giving assurance to stakeholders


meeting :

board members meeting has to be conducted every quarterly at the release of quarterly statements submitted to stakeholders every financial year, notification to owner has to be their with proper written statement to be submitted to CIO assigned to owner, CIO can act as proxy in meetings on behalf of owner but on special occassions if board of directors feel that presence of owner , co owner is required they have to be present to see that conduct of meeting takes place



consultants and their removal by board of directors---- owner

proxy owner and his rights :

CIO usually acts as proxy to owner but CIO doesnt have voting rights but has only one duty to intimate the meetings conducted by the board of members to owner, co-owner , minutes of company secretary can be taken up by CIO on behalf of owner and submit it to owner on their asking

implicit explicit rules and its effect on corporate governance :

in any corporate governance their is a provision of explicit implicit rules but arent mandatory rules to follow unless laid down as mandatory by the government to which corporate governance is associated with . commonsense used by the board of directors can be judged with proper legal documents used during meetings and documented with proper authentication done with courts.

GOVERNMENTS ROLE IS TO MONITOR SUBSTANTIAL CONTRIBUTORS OF COMPANY TO SOCIETY AND MAKE IT SUSTAIN LONGER WITH PROPER LAW AND ORDER

going concern concept and corporate governance :

companies are said to be going concern concept but according to me it is called butchering the company into malpractice . commonsense teaches that if board of directors with the help of stakeholders and justice decide together they can voluntarily close off the company instead of retaining the company just like that

corporate governance would come into picture only when board of directors are making decisions

corporate governance is important not ideas. ideas can be generated at any given point of time but no coporate governance is destruction of the company

merger of companies is important and not acquisition in 21st century--- lack of knowledge :

in 21st century it is mergers that give results to companies as knowledge is power and knowledgable people working as board of directors give a better picture to the stakeholders .if during acquisition board of directors are removed knowledge is also lost with passage of time which was available to the person who was removed . it is better to increase the board of directors and share information than removal during acquisition. merger is better

but on certain occassions if it is felt that board of members are becoming too excess, board of directors partially can be removed on the basis of those who participate in sharing knowledge and creation of knowledge. ideas are more important to germinate that number of board of directors.

those who participate and share knowledge they stay others are removed


co- owner

co owner is as powerful as owner in making decisions but in history to be effective their should not be more than two owners for any industry segment company across handling why ?

co owner is powerful than board of directors and to remove co owner owner permission and decision approval is very crucial for board of directors

incompetent owner or owners

the question is in decision making it is first owner and then co owner is asked but in corporate governance it is decision of both equally is powerful and to be approved by board of directors on equal terms

board of directors can overwrite the decision of owner or co owner but a supreme court judge has to be stated with board of directors to approve that decision taken by the board of directors overriding of owners decision is legitimate for the benefit of stakeholders if questioned by the owner or co owners

while change of ownership it is the owner has to pay off the debts to creditors before handing over the ownership to new owner and if the debt goes to selling off of plant and machinery it has to be done by the owner--- clean slate to new owner ownership with supreme court judge approval is mandatory

selling off of machinery should be done in accordance with board of directors and board of directors are answerable to the new owner as to decision making taken with owner as to the selling off of machinery --- profit selling plants should be sold last if their is no other option , new owner cant spend the money on the illogical decision taken up by the owner because the new owner does not have the information about how the business is being run , it takes minimum 1 to 2 years to know the operations side of the company taken up by the new owner

it is responsibility of board of directors to see that ethically it was handed to the new owner because it is board of directors who would be under line of fire if management doesnt happen properly in near future and board of directors cannot leave the board without getting their assent and approval from the new owner and government has a say in the matter too if company is a substantial company contributing to the welfare of the country

government with judges have to see that board of directors with owner took the right decision without mishandling the company

if the new owner is not satisfied with the decision taken by the owner and still approved by the board of directors new owner can sell it back to the owner stating of mismanagement within a limited period of time which would be decided by the judge with government approval as he was not part of the decisions taken by the owner

now question arises as to period of time to be taken up by the owner decision to be considered mismanagement -- it is 6 months backward from the period of sale to the new owner

why 6 months because product life cycle of anything into existence is 6 months

board of directors relationship with owner

Role of ceo : he is just like of board of directors

the best decision to run ceo with board of directors as per jagadish is to have rotational based type of ceo where each board of director is given an opportunity to become ceo and the one who became ceo is reinstated into board of directors wing after his completion period of fixed tenure decided by the board of directors

foreign company also should follow the same corporate governance as decided by the national government and shouldnt introduce corporate governance of its own nation into foreign soil

exporting of goods and importing of goods by any company be it national or foreign company should be done in accordance with government . if their is difference of opinion it should be settled off with the highest court of country it is being operated upon where export import is being done

if government of country want to do export import business with the help of government companies or has set up exclusively to do this type of business and is known to national companies , national companies can put up a petition infront of highest court in the country and see to it that within 24 hours maximum 48 hours decision is decided upon

removal of owner can also be done by the board of directors but can be debated upon by the owner with the help of highest court of justice whether removal was ethical or non ethical , till a new owner is settled upon upon removal of owner board of directors can govern the company but decisions regarding company has to be intimated to new owner and new owner has to be in power within 48 hours , if it is not done government should be intimated upon decisions taken up by the company board of directors if company is a substantial contributor to stakeholders and consumers in that country

centre and state government relationship under corporate governance

centre can override the decisions made by state government if centre feels that security of state is at stake with decision taken. under normal situations also state government has to give monthly reports to central government board assigned by prime minister as to activities being carried out by companies in their jurisdiction

this is needed because centre in times of emergency situation can take proper decisions along with state government
regarding administration of state. stakeholders can issue a notice to state government that they are interested in centre interference regarding corporate governance of company or companies which they feel are doing unauthorized workload at any given point of time.

if state government feels that centre or central board assigned by prime minister is taking them for a ride and not giving proper direction as fast as they require then state government can ask for change of board which is assigned by prime minister. but this change of board of directors assigned by prime minister can be changed only if other minimum 3 governments put up a petition infront of supreme court say of INDIA asking for the change.

the board of directors assigned by the prime minister actually must be related to corporate bodies members

example : board of directors of big companies whose duty is to look into the management holistically regarding company and industry growth of companies stationed in states.

Based upon the monthly reports and future reports designed by state government money finance would be provided by the board . if board is found to be unethical in its operations change of board would happen within 72 hours .

this unethical activities of board can be petitioned by the state governments minimum 3 states to the supreme justice and if proven supreme justice should talk to prime minister and proper course of action would be taken against the board or board of member/members.

ARMY , NAVY , AIR FORCE chiefs can be invited into these boards if they are interested in nations welfare. VOLUNTARY BASIS

how the board has to function assigned by prime minister

the board actually is independent with no relationship with companies. daily weekly reports and monthly reports study is what the board has been assigned regarding state developments. at any given point of time the board can ask the state chief minister to generate a report which has to be submitted to the board within one month from the date of asking.

failure of doing so finance of state can be affected. without reports board cant assign finance

board is duty bound to prepare reports of their own and reports of state which are vital or information is vital would be submitted to planning commission chief prime minister and deputy planning commission to prepare annual plans and 5 year plans.

board can assign for themselves man power to see implementation of plans done in state governments.

paradox of the whole world of corporate governance ---- funny side

MONEY AND DONATION

story of a manhood

a person is illionaire , why dont you donate in trillionaire
a person is trillionaire, why dont you donate in billionaire
a person is billionaire , why dont you donate in crores
a person is crore person, why dont you donate in lakhs
a person is a lakhier , why dont you donate in thousands
a person is a thousandier , why dont you donate in rupees
a person is a rupees owner people say you are a pauper

story of a career personality

a person works hard becomes an executive after education
people say only executive so he becomes a manager
people say only manager so he becomes a managing director of a company
people say only managing director so he becomes a board director of company
people say only board of director of a single company so he becomes a board of director of companies
people say only board of director of comapnies so he becomes a finance minister of a country
people say only finance minister when are you becoming prime minister so he becomes a prime minister
people say only prime minister of a country when are you becoming president of usa so he becomes president of USA
People say when are doing renunciation and becoming a pope. he is better than president of usa so he becomes a pope of the whole world
people then say when are you dying , die soon their are people waiting in queue to become a pope

paradox of the whole mankind ,

moral of the story is that their is no peace looking outside their is peace within if looked inside , self satisfaction is such a thing that a pauper is as powerful as pope of the world

but in life their is something called knowledge which saves a person from devastation and with application of knowledge one can recoup back to power also from poverty.

it is not knowledge it is application of knowledge with asking right questions determines the fate of manhood

END OF JAGADISH LITERATURE