CORPORATE GOVERNANCE By: Group C Aneesh Srivastava (B12008) Ankan J Bhattacharyya (B12010) Mandeep Singh (B12022) Priti (B12030) Trisha Chakrabarty (B12053)

AGENDA Corporate Governance: An Introduction Principles of Corporate Governance Corporate Governance in India Regulations:  Sherman Antitrust Act (1890)  Clayton Act (1914)  Federal Trade Commission Act (1914)  Robinson-Patman Act (1936)  Celler-Kefauver Act (1950)  Consumer Goods Pricing Act (1975)  Securities Law (1933)  Sarbanes-Oxley Act (2002) Regulations in India

Corporate Governance: An Introduction Corporate governance refers to the system by which corporations are directed and controlled The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation Provides the structure through which corporations set and pursue their objectives, while reflecting the context of the social, regulatory and market environment

Principles of Corporate Governance Rights and equitable treatment of shareholders Interests of stakeholders Roles and responsibilities of the board Integrity and ethical behavior Disclosure & transparency

Corporate Governance in India In India, SEBI defines it as, “acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders” The Indian approach is drawn from Gandhian philosophies It also draws heavily from corporate governance policies of USA & UK etc.

Sherman Anti-Trust Act Established in 1890 First act to prohibit “monopolies or attempts to monopolize” Provides for injunctions to restrain activities in violation and allows for treble damages Provides for criminal felony penalties for both individuals & corporations Also provides substantial fines & prohibitions

Clayton Act Passed in 1914 Supplemented the Sherman Act Includes limitations on  Tying contracts  Exclusive dealings  Inter corporate stockholding  Interlocking directorates  Mergers

Federal Trade Commission Act Established in 1914 Prevents unfair methods of competition and deceptive practices Empowered by Wheeler Lea Act by giving it the power to regulate unfair practices whenever the public is deceived Led to the establishment of the FTC

Robinson-Patman Act Established in 1936 Known as Price Discrimination Act Amended the Clayton Act Defined price discrimination as unlawful Prohibits  Brokerage allowances,  promotional allowances or furnished services or facilities Enforced agencies the right to limit quantity discounts

Celler-Kefauver Act Established in 1950 Known as Anti merger Act Amended the Clayton Act Broadened the power to prevent the acquisition of companies which may substantially impact competition

Consumer Goods Pricing Act Established in 1975 Allowed Fair Trade pricing of consumer goods to protect small retailers Made control of retail prices easier which helped in  Positioning products  Managing marketing channel margins

Securities Law Established in 1933 Designed to protect the investors and general public In India, SEBI (Insider Trading) Regulations 1992, framed under Section 11 of the SEBI Act, 1992, are intended to prevent and curb the menace of insider trading in Securities With effect from 20th February 2002, SEBI amended these Regulations and rechristened them as SEBI 9 Prohibition of Insider Trading Regulation, 1992 These Regulation have been further amended in November 2002

Sarbanes-Oxley Act Introduced on July 30, 2002 Created as a response to the Enron Scam & the cases related to WorldCom, Tyco etc. Formed the base of modern Corporate Governance Mandated a number of reforms to o Enhance corporate responsibility o Enhance financial disclosure o Combat corporate and accounting fraud o Create Public Company Accounting Oversight Board to oversee the auditing activities

Common Law Also known as Uniform Commercial Code Standard set of law that governs the contract and associated case law It is adopted by all states in the USA except Louisiana

Competition Laws in India The first competition law in India was the Monopolies & Restrictive Trade Practices (MRTP) in 1969 After the liberalization drive in 1990’s it was amended as Competition Act (2002) Led to the Indian counterpart of FTC, the Competition Commission of India (CCI)

MRTP: Key Points Regulation of Monopolistic Trade Practices: o Regulate production & terms of sale o Prohibit action restricting competition o Fixing standards for goods produced Regulation of Unfair Trade Practices: o Any such practice would lead to the agreement getting null & void

Competition Act (2002): Key Points As per the last amendment on December 10, 2012 this act states:  More power to the Chairperson of CCI to conduct “dawn raids”  No organization can exert “collective dominance”  “Turnover” definition to exclude taxes levied on sales & distribution

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