Internal and External Institutions and Influences CORPORATE GOVERNANCE Internal and External Institutions and Influences
RESPONSIBILITIES AND FUNCTIONS OF BOD
To hire, evaluate and even fire Top Management To vote on major operating proposals (e.g. large capital expenditures and acquisition) To vote on major financial decisions
To offer expert advise to management To make sure the firm’s activities and financial condition are accurately reported to its shareholders
BOARD COMMITTEES Audit committee Compensation committee Nomination committee
CEO FUNCTIONS
SUPPORT THE BOARD DELIVERY OF PROGRAM AND SERVICES FINANCIAL RISK AND TAX MANAGEMENT
HUMAN CAPITAL MANAGEMENT PUBLIC RELATIONS
FUNCTIONS OF CFO
Implements Internal Controls Supervises Major Impact Projects Develops Relations with Financing Sources
Advisor to Management Drives Major Strategic Issues
Risk Manager Relationship Role Objective Referee
STOCK CERT SAMPLE
EXTERNAL ENVIRONMENT OF CORPORATE GOVERNANCE
AUDITORS LEGAL ENVIRONMENT MARKETS Important points: product,capital,labor
OTHER EXTERNAL FACTORS
Political Environment Technological Environment Social Environment
CORPORATE PROTECTION WITHIN LEGAL BOUNDARIES
FLIP IN-allows existing shareholders to purchase more shares FLIP OVER- allow the shareholders to purchase the bidders shares
DEBT FAÇADE- takes plenty of debts to make it unappealing The company offers its employees stock options, high bonuses and exceptional pay.
PERSONAL LIABILITY OF OFFICERS AND DIRECTORS
ISSUES INVOLVING MISAPPROPRATION ISSUES INVOLVING NON DISCLOSURE OF CONFLICT OF INTEREST ISSUES ON LOYALTY
ISSUES ON NON SEPARATION OF PERSONAL AND BUSINESS CINCERNS ISSUES ON PRUDENCE
INDEMNIFICATION REFERS TO THE ACT OF REIMBURSING OFFICERS AND DIRCTORS FOR EXPENSES INCURRED, LIABILITIES ACCRUED AND AMMOUNTS PAID IN DEFENDING CLAIMS BROUGHT TO THEM FOR ACTIONS ON BEHALF OF THE CORPORATIONS
SHAREHOLDERS IMPOSABLE LIMITATIONS
Through Classes of Stock
CUMULATIVE PREFERENCE SHARES- it gives shareholders the right that if dividend cannot be paid in one year it will be carried forward in the next succeeding years
REDEEMABLE SHARES- with an agreement that the company can buy back at a future date.
Supermajority Refers to percentage of ownership that is way above simple majority which is, one half plus one share of the total shares outstanding
SHAREHOLDERS VOTING AGREEMENTS