The Etymology Of

2012

National Proverty Eradication Programme (NAPEP) Case study: Nigeria

Impact and Implementation of the National Eradication Programme (NAPEP)

NOSIRU GAFAR.O

F/HD/09/3620039

AKPAN ELIZABETH INI

F/HD/09/3620004

OZURUONYE EMEKA

F/HD/09/3620090 F/HD/09/3620077

UDOH ENOBONG. H

F/HD/09/3620040

ADEBAYO MUDASIRU. M

F/HD/09/3620013

OJO FEYISAYO. C

F/HD/09/3620014

ODUNSI SEUN. R

F/HD/09/3620082

KPAGI THANKGOD. N

F/HD/09/3620058

KAREEM ADEOLA. K

F/HD/09/3620085

Presented to: MRS. Ejinwunmi 3/20/2012

INTRODUCTION The etymology of „governance‟ cornes from a Latin words gubernare and gubernator, which refer to steering and to the steerer or captain of a ship. The word governance cornes from the old French „gouvernance‟ and means control and the state of being governed (farrar, 2011). Corporate governance has succeeded in attracting a good deal of public interest because of its important for the economic health of corporations and the welfare of society, in general. However, the concept of corporate governance is defined in several ways because it potentially covers many activities having direct or indirect influence on the financial health of corporate entities. Milton Friedman (2002), an economist and Noble laureate, said that corporate governance is to conduct the business in accordance with owners or shareholders‟ desires, which generally will be to make as much money as possible, while conforming to the basic rules of the society embodied in law and local customs. The Organization for Economy Cooperation and Development (OECD) (1999) defined corporate governance as the system by which business corporation are directed and controlled. The World Bank (1999) defined corporate governance from tow different perspectives . A: from the standpoint of a corporation the emphasis is put on the relationship between the owners, management board and other stakeholders (the employees, customers, suppliers, investors and communities). B: from the public policy perspective, corporate governance refers to providing for the survival, growth and development of the company, and at the same time its accountability in the exercise of power and control over companies. Monks and Minow (2001) defined corporate governance as the relationship among various participant in determining the direction and performance of corporations. The primary participant are the shareholders, the management, and the board of directors. Gregory (2001) in her very well done comparison study entitled, “ International Comparison of Corporate Governance Guidelines and Codea of Best Practice: Developed Markets,” described corporate governance as the blend of law, regulation, and appropriate voluntary private-sector practices which enables the corporation to attract financial and human capital, perform efficiently, and thereby perpetuate itself by

generating long term economy value for its shareholders, while respecting the interest of stakeholders and society as a whole. Olin (2001) said, corporate governance is a board term that encompasses rules and market practices that determine how companies make decisions, the transparency of their decision making process, the accountability of their directors, managers and employees, the information they disclose to investors and the protection of minority shareholders. From the author‟s point of view, corporate governance can be defined as the set of rules and incentives by which the management of a company is directed and controlled in order to maximize the profitability and long term value of the firm. Corporate Governance Models around the World There are many different models of corporate governance around the world. These differ according to the variety of capitalism in which they are embedded. The AngloAmerican "model" tends to emphasize the interests of shareholders. The coordinated or multi-stakeholder model associated with Continental Europe and Japan also recognizes the interests of workers, managers, suppliers, customers, and the community. Regulation 1.

Legal environment - General

Corporations are created as legal persons by the laws and regulations of a particular jurisdiction. These may vary in many respects between countries, but a corporation's legal person status is fundamental to all jurisdictions and is conferred by statute. This allows the entity to hold property in its own right without reference to any particular real person. It also results in the perpetual existence that characterizes the modern corporation. The statutory granting of corporate existence may arise from general purpose legislation (which is the general case) or from a statute to create a specific corporation, which was the only method prior to the 19th century. In addition to the statutory laws of the relevant jurisdiction, corporations are subject to common law in some countries, and various laws and regulations affecting business practices. In most jurisdictions, corporations also have a constitution that provides

individual rules that govern the corporation and authorize or constrain its decisionmakers. This constitution is identified by a variety of terms; in English-speaking jurisdictions, it is usually known as the Corporate Charter or the [Memorandum and] Articles of Association. The capacity of shareholders to modify the constitution of their corporation can vary substantially. 2.

Codes and guidelines

Corporate governance principles and codes have been developed in different countries and issued from stock exchanges, corporations, institutional investors, or associations (institutes) of directors and managers with the support of governments and international

organizations.

As

a

rule,

compliance

with

these

governance

recommendations is not mandated by law, although the codes linked to stock exchange listing requirements may have a coercive effect. For example, companies quoted on the London, Toronto and Australian Stock Exchanges formally need not follow the recommendations of their respective codes. However, they must disclose whether they follow the recommendations in those documents and, where not, they should provide explanations concerning divergent practices. Such disclosure requirements exert a significant pressure on listed companies for compliance. One of the most influential guidelines has been the 1999 OECD Principles of Corporate Governance. This was revised in 2004. The OECD guidelines are often referenced by countries developing local codes or guidelines. Building on the work of the OECD, other international organizations, private sector associations and more than 20 national corporate governance codes, the United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) has produced their Guidance on Good Practices in Corporate Governance Disclosure. This internationally agreed benchmark consists of more than fifty distinct disclosure items across five broad categories:



Auditing



Board and management structure and process



Corporate responsibility and compliance



Financial transparency and information disclosure



Ownership structure and exercise of control rights

The World Business Council for Sustainable Development WBCSD has done work on corporate governance, particularly on accountability and reporting, and in 2004 released Issue Management Tool: Strategic challenges for business in the use of corporate responsibility codes, standards, and frameworks. This document offers general information and a perspective from a business association/think-tank on a few key codes, standards and frameworks relevant to the sustainability agenda. Most codes are largely voluntary. An issue raised in the U.S. since the 2005 Disney decision in 2005 is the degree to which companies manage their governance responsibilities; in other words, do they merely try to supersede the legal threshold, or should they create governance guidelines that ascend to the level of best practice. For example, the guidelines issued by associations of directors, corporate managers and individual companies tend to be wholly voluntary. For example, The GM Board Guidelines reflect the company‟s efforts to improve its own governance capacity. Such documents, however, may have a wider multiplying effect prompting other companies to adopt similar documents and standards of best practice.

Parties to Corporate Governance The most influential parties involved in corporate governance include government agencies and authorities, stock exchanges, management(including the board of directors and its chair, the Chief Executive Officer or the equivalent, other executives and line

management, shareholders and auditors). Other influential stakeholders may include lenders, suppliers, employees, creditors, customers and the community at large. The agency view of the corporation posits that the shareholder forgoes decision rights (control) and entrusts the manager to act in the shareholders' best (joint) interests. Partly as a result of this separation between the two investors and managers, corporate governance mechanisms include a system of controls intended to help align managers' incentives with those of shareholders. Agency concerns (risk) are necessarily lower for a controlling shareholder. A board of directors is expected to play a key role in corporate governance. The board has the responsibility of endorsing the organization's strategy, developing directional policy, appointing, supervising and remunerating senior executives, and ensuring accountability of the organization to its investors and authorities. All parties to corporate governance have an interest, whether direct or indirect, in the financial performance of the corporation. Directors, workers and management receive salaries, benefits and reputation, while investors expect to receive financial returns. For lenders, it is specified interest payments, while returns to equity investors arise from dividend distributions or capital gains on their stock. Customers are concerned with the certainty of the provision of goods and services of an appropriate quality; suppliers are concerned with compensation for their goods or services, and possible continued trading relationships. These parties provide value to the corporation in the form of financial, physical, human and other forms of capital. Many parties may also be concerned with corporate social performance. A key factor in a party's decision to participate in or engage with a corporation is their confidence that the corporation will deliver the party's expected outcomes. When categories of parties (stakeholders) do not have sufficient confidence that a corporation

is being controlled and directed in a manner consistent with their desired outcomes, they are less likely to engage with the corporation. When this becomes an endemic system feature, the loss of confidence and participation in markets may affect many other stakeholders, and increases the likelihood of political action.

General Principles of Corporate Governance 

Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings.



Interests of other stakeholders: Organizations should recognize that they have legal and other obligations to all legitimate stakeholders.



Role and responsibilities of the board: The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors.



Integrity and ethical behavior: Ethical and responsible decision making is not only important for public relations, but it is also a necessary element in risk management and avoiding lawsuits. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that reliance by a company on the integrity and ethics of individuals is bound to eventual failure.

Because of this, many organizations establish Compliance and Ethics Programs to minimize the risk that the firm steps outside of ethical and legal boundaries. 

Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

IMPORTANCE OF CORPORATE GOVERNANCE 1.

Value-adding philosophy—Corporate governance should provide foundations for all corporate governance functions to add value to the company's sustainable performance.

2.

Ethical conduct—Corporate governance should promote ethical conduct for all participants throughout the company. This entails setting an appropriate tone at the top and a firm commitment by corporate governance participants to adhere to ethical behavior and conduct.

3.

Accountability— Corporate governance should foster accountability and responsible decision making throughout the company. All participants should be held account able for their decisions, actions, and performance. Accountability is the cornerstone of corporate governance in continuously monitoring best practices. Main drivers of accountability are the acceptance of responsibility, ethical decision making, transparency, and candor, which result in the establishment of trust and a mutually beneficial working relationship between

the

company

and

its

shareholders.

In

today's

environment, global businesses are under close scrutiny and profound pressures from lawmakers, regulators, the investment community, and their diverse stakeholders to accept accountability and responsibilities for their MBL or governance, economic, ethical, social, and environmental performance. 4.

Shareholder democracy and fairness— Corporate governance should promote share holder democracy in director elections by recognizing and respecting the rights of shareholders. Furthermore, the rights and interests of all stakeholders should also be acknowledged and respected. Shareholders have the right to (a) vote for the election of directors; (b) receive annual audited financial statements and quarterly reviewed financial statements; (c) demand access to corporate documents, including minutes of board meetings; (d) submit shareholder resolutions that are placed in the annual proxy statement; (e) vote on important business transactions, such as mergers and acquisitions; and (f) bring shareholder derivative lawsuits. Shareholder democracy is enhanced when shareholders are granted majority voting for the election of directors, advisory voting for the approval of executive compensation, and access to proxy materials for the nomination of director candidates.

5.

Integrity of financial reporting— Corporate governance should safeguard the integrity of financial reporting by enhancing the quality, reliability, and transparency of financial reports. The achievement of integrity in financial reporting depends on the competent and ethical conduct of all participants in the financial reporting process and the efficacy of regulations and standards governing the process. The erosion of confidence in financial reporting integrity may result in more regulations that are often not cost effective, efficient, or

scalable. 6.

Transparency— The companies' actions, governance, and financial and nonfinancial aspects of its business should be easily available and understandable by all parties concerned.

7.

Independence— The concept of independence in corporate governance determines the extent to which the corporate governance process and its related mechanism minimize or avoid conflicts of interests and self-dealing actions of its key personnel.

Corporate governance in Saudi Arabia The development of corporate governance in Saudi Arabia is of interest for a number of reasons. Saudi Arabia present a unique blend of size, stage of development of the economy and wealth, coupled with strictness of Islamic observance. Also, corporate governance in Saudi context has received very little attention from researcher. In this paper, four important element of corporate governance in Saudi Arabia will be discussed, namely: shareholder right, board of directors, audit committees and disclosure and transparency. Islamic law and Islamic jurisprudence are analyzed as a basis for the regulation of corporate governance. It is important to mention here that Saudi Arabia is in the foundation stage of developing corporate governance and no code of best practices has been set up yet. REASNS FOR CORPORATE GOVERNANCE IN SAUDI ARABIA Empirical evidence (Fremond et all., 2002) suggests that good corporate governance increases the efficiency of capital allocation within and across firms, reduces the cost of capital for issuers, helps broaden access to capital, reduces vulnerability to crisis, fosters savings provisions and renders corruption more difficult. A careful study of corporate governance is important at the present time in Saudi Arabia because the future will be even more competitive than it is now. In emerging market economies the business environment lacks many element needed for a competitive market and a culture enforcement and compliance. Saudi Arabia needs to

take a long hard look at the way other countries systems work and keep their own under review. To remain competitive in changing world, Saudi Arabia corporation must innovate and adopt the corporate governance practices so that they can meet new demands and new opportunities. The Saudi government also has an important responsibility for shaping an effective regulatory framework that provides for sufficient flexibility to allow the Saudi market to function effectively and to respond to expectation of shareholders and other stakeholders. The way this principle should be adopted is the responsibility of the government and the market participants. Principles of corporate governance in Saudi Arabia Equitable treatment

Under Saudi company law, shareholders have the right to attend

of shareholders

annual general meetings and have one share, one vote. They have the right to appoint the board of directors. Shareholders rights in Saudi companies are to a certain extent, theoretically protected and maintained, but in practice, we find that shareholders do not view their rights as seriously as they should

Responsibilities of

Saudi company law specifies the duties and responsibilities of

the board of

Saudi company boards. The specified goal of boards is to protect

directors

shareholder wealth and the interests of stakeholders. Boards are now required to appoint audit committees from non-executive directors. As with shareholders rights, some interviewees indicated that there was a gap between what was prescribed by Saudi company law and what was happening in practice.

Disclosure by Saudi

This stipulated by OECD (2004), transparency is a comerstone of

companies

good corporate governance. Before the 1990s, Saudi disclosure requirements were low, with companies only required to provide

a balance sheet, a profit and loss account

PRINCIPLES OF CORPORATE GOVERNANCE IN KOREA KORA 1.

Basic feature /characteristics Appointment of directors

Description Directors are appointed at a shareholders‟ general meting

and should be at least three in number.

However, in case of a company of which the total capital si less than W500,000,000, the number of the directors may be one or two unless prescribed otherwise in the articles of incorporation. 2.

Duties and liabilities of

The duties of directors related to business pursuant to

directors

the commercial code are mainly classified into the duties to be faithful and duties to keep secret. In cases where a director has caused harm to the company, shareholders representing

one percent of total

outstanding shares may request the company to file a suit against such director.

3.

Notice of shareholder‟s

Shareholders must be notified, in writing or by

meeting

electronic documents of any general meeting at least two weeks prior to such meeting.

4.

Proxy rights

Shareholder may have proxies to exercise the voting rights on their behalf. In this case, the proxy shall submit a document providing power of representation

at the general meeting. 5.

Rights of foreign creditors

There are no separate regulations governing the status

and shareholders

of foreign shareholders. However, the commercial code specifies indicating

the

principle

that

of

shareholders

shareholder‟s

right

equality are

not

discriminated against according to nationality. 6.

Insider trading

Securities

and

exchange

land

prohibits

officer,

employees, proxies, major shareholders or other insiders from providing information to third parties in case they learn undisclosed important information in relation to the business. 7.

Government regulatory

There are two main government regulatory bodies in

bodies

Korea: the ministry of finance and economy (MOFE) and the financial supervisory commission (FSC). The FSC has the securities and futures commission under its control and the financial supervisory services (FSS0 as its executive body. Monetary policy is the responsibility of the monetary board of the bank of Korea. MOFE has eth authority to set the principles and the basic directions of economic policy.

8.

Korean accounting

In the process of formulating Korean accounting

standard

standards, the Korea Accounting Institute (KAI), once it decides international Accounting Standard (IAS) inputs are not sufficient for use in Korea, refers to accounting standard generally accepted in the U.S.

9.

Ease of access to financial

All companies

are required

to keep their audited

statement

financial statements as well as the audit report and make them available for their shareholders and creditors. If any of them seek access to the financial information during normal business hours.

Principles of Corporate Governance in United State of America (USA) 1.

Objectives

The objectives of shareholder value is directly on owner interest compared to Germany who specialized in corporate interest or whole organization objectives.

2.

Board system

The board of director of corporate governance in USA has only one tier board such as capital market oriented.

3.

Stakeholder

There is always selected amount of stakeholder that run

participation

participate in every aspect of corporate governance in USA compared to Germany who has area of specification.

4.

Share ownership

The ownership of corporate government in USA. Provide great avenue for small firms, large share management to involved the Germany who has a specific group of bodies or institutions.

5.

Capital market

The capital market has plentiful liquid fund. i.e they have enough capital fund to financed corporate governance U.S.A Thanger many corporate governance.

6.

Bank system

They specialized on varieties

of books, compared to

Germany who are universal in financial institution.

Principles of corporate governance in India INDIA

Basic feature

Description

/characteristics Board of director

(a) No need for German style two tired board (b) For a listed company with turnover exceeding (c) No single person should hold directorship in more than 10 listed companies (d) Non executive directors should be competent and active clearly defines responsibilities like in the Audit committee (e) Attendance record of directors should be made explicit at the time of re-appointment. Those with less than 50% attendance should not be reappointed. (f) Key into that must be prevented to the board as listed in the code. (g) Audit committee listed companies with turnover over Rs.

Remuneration committee

The

remuneration

committee

should

decide

remuneration committee should decide remuneration package for executive directors. It should have at least 3 directors, all non executive can be chaired by at least 4 board meeting a year with maximum gap of 4 months between any 2 meeting available to boards stipulated.

minimum information

Disclosure

and (a)

transparency

Companies

should

provide

consolidated

accounts for subsidiaries where they have majority shareholding.

(b)

Disclosure list pertaining to related party transaction provided by committee till ICAI‟s norms is established.

(c)

Management

should

inform based of

potential conflict of interest situations.

Creditors’ right

a. It should rewrite loan covenants, eliminating

nominee

directors excepts in cases of serious and systematic debt default or provision of insufficient information. b. Same disclosure of norms for foreign and domestic creditors. Shareholders’

a. A board of committee headed by a non-executive director look

right

into shareholders complaints and grievances b. Half yearly financial results and significant event reports be mailed to shareholders

Special discloses a. Companies making initial public offering (IPO) should inform IPO

the audit committee of category-wise uses of funds every quarter. b. The audit committee should advise the board for action in this matter

all

Basic Principles of corporate governance system Japan Shareholder

Only beginning of broader shareholder participation and activities of

influence

(nongovernmental) institutional shareholders. Although eroding, 'keiretsu' still have considerable influence through cross-holding. Expect any change to be slow and gradual

Board

Most still large size, more celebrity members than real decision mating, which in Japan is consensus-driven and more emergent than formalized. First pioneers like Sony or Asahi have tried to install a professional board, but Toyota still prefers the traditional way with slow adaptation

Top management Seniority principles are eroding, but still influential. However the more companies are forced to act globally (and do not only export), the" more pressure is on them to professionalize management along 'western' standards and processes. The (individual) accountability for performance and supervision is key to this Regulation

Despite capital market reforms and privatization, the government's influence is still stronger than even Latin-European countries (sometimes more informal, but not less effective)

Employees

No formal co-determination process, but still pressure for consensus

Basic Principles of corporate governance systems: France Shareholder

Considerable, as many big companies have block holders with

influence

multiple voting rights, influenced by the government (declining, but still visible especially in pre-election limes), increasing minority shareholder and transparency rights through the EU influence; growing foreign shareholding, mainly by institutional investors, leading to conflicts between block holders and minority investors (relatively to, e.g., Benelux and Germany) as general assemblies were previously mere formalities

Board

Option to go for one-tier or two-tier board (60:40. the top tier has mostly opted for two-tier), dominant position of the 'president and director general', who often chairs the board also in the two-tier system, but increasingly boards are becoming more active, but so far few have ousted a president/director general due to the tight network among the French elite

Top

Dominated by graduates of the 'Grand licole*, with technical

management

and administrative background, often service in government, more hierarchical organizations, lower degree of viable compensation (also growing)

Regulation

Detailed, based on traditional mistrust of market forces, most driven by EU directives, only slowly emergence of 'soft regulations' (e.g., codes)

Employees

No relevant involvement of organized labor as also the unions want to have clear division of responsibilities

Principles of corporate governance in South Africa Shareholders

Mostly family or government controlled business with stock

influence

market listing; control often based on different voting rights. Minority rights a permanent issue, often hampered by lack of legal enforcement. Similar: transparency regulations are not always enforced. Effective capital markets and other 'capitalist' institutions still in early development

Board

Often dominated by insiders, e.g., family members and friends, which makes management control less efficient. Reluctance for transparency, strong relation-based decisions

Top management

Often still part of 'friends and family', interested in risk diversification through conglomerate building to buffer volatile business development, little culture of (personal) accountability in many countries

Employees

Even if laws are 'perfect', lack of enforcement, e.g., due to corruption

and

independent

judiciary

makes

any

law

implementation uncertain and decisions of authorities often arbitrary Not at all-

Differences between U.S.A. and European model of corporate governance Significant difference

U.S.A.

European countries

(i) Definition of corporate It focuses primarily on

It emphasizes the

governance

protection of all

aligning the interest of

management with those of

stakeholders interest,

the shareholders

including alignment of the interest of controlling shareholders.

(2) Disposed versus

Here the capital ownership is

Capital ownership is more

concentrated ownership

dispersed because about 100

concentrated with majority

million Americans own shares ownership and controlling of public company through

shareholders.

direct ownership (3) Fiduciary duties

The Anglo-Saxon in the U.S.A

The fiduciary principles is

and U.K. Establishes an

not well developed and this

enforceable set of fiduciary

the role based approach

duties for directors to act as

often allows controlling

agents in the best interest of

shareholders to extract

both controlling and minority

private benefits

shareholders. (4) Different types of

The dispersed US structure is

Shareholders are not

fraud

more prone to short-term

susceptible to short-term

earnings management and

earnings management

overstating earning to stock

fraud.

prices

REFERENCES Aguilera, R. 2004, "Corporate governance and Employment Relations: Spain in the Context of Western Europe", in Gospel H. and Pendleton A. (ed.), Corporate Governance and Labour Management. An International Comparison, Oxford University Press.

Solomon, J. 2007, Corporate Governance and Accountability, second edition, Wiley, England.

Van den Berghe, L. 2002, Corporate governance in a globalising world: convergence or divergence?, Kluwer Academic Publishers, USA. Rajesh Chakrabarti. 2005, Corporate Governance in India – Evolution and Challenges College of Management, Georgia Tech 800 West Peachtree Street, Atlanta GA30332, USA.

www.bookboon.com, Corporate Governance principles