In the words of Catherwood, “Corporate governance means that company manages its business in a manner that is accountable and responsible to the shareholders. In a wider interpretation, corporate governance includes company accountability to shareholders and others stakeholder such as employees, suppliers, customers and local community”.

Corporate governance refers to the accountability of the Board of Directors of a corporation towards its stakeholders. In order to protect and promote the interests of all stakeholders, corporate governance should encompass well defined set of systems and processes. Systems of directors, their optimum size, composition and qualifications, role and competencies, frequency of change of board members and nominee directors. The organization of different committees by board members such as management committee, share transfer committee, executive compensation committee, investment committee, audit committee, etc., forms an integral part of the system for sound corporate governance. While the main board of the company deal with major policy decisions and strategic directions that the company should take, the constitution of these committees makes focused attention on various aspects of company’s working. The board along with different committees and chief executive officer (CEO) should devise right kinds of mechanisms for organizational effectiveness. These my include performance management system, periodic business reviews, environmental audit, energy audit, secretarial and legal audit, benchmarking customer satisfaction, benchmarking employees’ satisfaction, and so on.

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