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Corporate Translation Service asked:


Corporate Translation Service - The Important Aspects Agencies Must Offer When Offering a Top-notch Corporate Translation Service



Yes, it´s a jungle out there in the corporate world. You want your company to get a bigger piece of the business, to grow, expand, become a market leader. You want to reach more potential customers, even do business with foreign customers. So, you suddenly see the importance of a truly professional corporate translation service. But how do you select the one that will help you reach your business goals and needs? It´s also a jungle out there in the corporate translation world; agencies are highly competitive. The pros can tell you exactly what agencies must deliver when delivering a top-notch corporate translation service.

The accurate message

Bad errors, confusing ideas, or a mainly messy translation might make you lose a deal, and at least reflect badly on you and your company. To avoid any kind of embarrassment, as well as the loss of what could have been a fruitful business, the agency you hire must deliver error-free translations that precisely communicate the meaning of the original document using the words and style most appropriate for the intended use of the translation. They must hire certified and experienced translators who can respect faithfully the message, meaning, style and intent of the original document while delivering a translation that reads like an original. Agencies that work in corporate translation service have editing teams that proof-read and meticulously read translations for errors, which is why they can ensure they will deliver a perfected copy of your translated document.

Prompt delivery times

Time is of the essence. This is why a professional agency must ensure quick delivery of your translated document. Nevertheless, you must be realistic. Agencies can meet the toughest deadlines, but larger documents do take longer, which is why an agency that provides high-quality corporate translation service will have several translators working on the same document, and later have an editor proof-read it.

Competitive prices

A top-notch translation that will help you seal the deal is priceless. Well, not really. It does have its price. Nevertheless, you should never have to pay an arm and a leg for it. On the other hand, if the rate is rock-bottom, you´ll probably be getting low-quality too. Consider the possibility of asking for a bulk discount for high quantities of work.

Privacy Policy

One cannot underestimate the importance of a confidentiality agreement. Are you concerned some of your business secrets might be revealed? Do not fret. Agencies used to delivering corporate translation service usually work under confidentiality agreements with their translators, which ensures total confidentiality for the documents being translated. Nevertheless, you could specifically ask for one.



www.TranslationsLCI.com - Corporate Translation Service

Prof. Surinder Pal Singh asked:


1.         Introduction

Over the past two decades, the forces of economic globalization, political transformation and technological innovation have increased the global reach and influence of the private sector. The number of transnational corporations has almost doubled from 37,000 in 1990 to over 60,000 today, with some 800,000 foreign affiliates and millions of suppliers and distributors operating along their global value chains. This process has conferred new rights and created new business opportunities for global corporations and large national companies, while also exposing weaknesses in national and global governance structures. It has also resulted in new competitive pressures and risks, and led to increased demands for greater corporate responsibility, transparency and accountability.

As a result, today’s business leaders face a complex and often contradictory set of stakeholder expectations. They are being called on to engage with activists as well as analysts, to manage social and environmental risks as well as market risks, to be accountable for their non-financial as well as their financial performance, and to cooperate as well as to compete, often with non-traditional partners, focused on unfamiliar issues. They are under pressure from governments, consumers, trade unions, non-governmental organizations and a small but growing number of their investors, to demonstrate outstanding performance not only in terms of competitiveness and market growth, but also in their corporate governance and corporate citizenship.

In short, corporate executives are faced with a complex, unprecedented challenge: How can they continue to deliver shareholder value while also delivering, and demonstrating that they are delivering, societal value?

2.         What is corporate citizenship?

The term ‘corporate citizenship’runs the risk of being all things to all people. But it does have some easily identifiable elements too. The basic idea is to understand business as part of society, contributing directly to the welfare of society, rather than somehow separate from it. Whereas in the past the baseline of good behaviour was ‘acting within the law’across the company’s operations, newer aspirations range from the maxim ‘do no harm’through to assessing ‘overall net impacts’. Companies need to go beyond simply obeying the law and making a competitive return for their shareholders if they are to respond to the challenge of citizenship.

Corporate citizenship invites companies to make strategic choices based on an understanding of the total impacts of their business in society. The practice of corporate citizenship involves a

focus on one or more of three main areas:

v     the societal impacts that flow from basic business policy and practice (as managed and measured through various codes of conduct, ‘values statements’and company reports);

v     the impacts that a company has up and down the value chain (e.g. when child labour is employed by its suppliers; or when end consumers dispose of its products in ways likely to harm the environment); and

v     the impacts that come from the voluntary contributions that businesses make to communities affected by their operations (including charitable gifts, community investment and commercial initiatives in the community).

Management and communication tools such as the ‘social audit’, development of key performance indicators on corporate citizenship, ‘benchmarking’best practice across a variety of industries, and best practice on ‘cause-related marketing’have all grown up alongside these core elements of corporate citizenship. Codes of  good conduct for companies abound, as do stamps or standards awarded by third parties, such as the Social Audit stamp of the Brazilian NGO IBASE, or the Social Accountability 8000 standard developed by the Council on Economic Priorities Accreditation Agency. The professionalization of environmental management has had an impact on the ‘new’tools of social management and accounting, accelerating the process of adaptation to the corporate citizenship agenda. But not all companies professing to be good ‘corporate citizens’choose to use all of these tools, and the current state of ‘corporate citizenship’varies from country to country.

3.         What drives Corporate Citizenship in a Global Context?

The emergence of ‘corporate citizenship’as a guiding principle for business strategy has been driven by a number of changes in the business operating environment. The overall process of globalization

affects all businesses one way or another.

Globalization has given rise to unprecedented links between economies, cultures, individuals and groups. Technological advances such as the internet have transformed communications. When multinational corporations apply different standards at home from those in their overseas operations, the gaps are exposed to external scrutiny as never before. The result is that the corporate

citizenship debate has acquired an increasingly significant ‘international’ dimension, raising one of the most difficult sets of questions in the current policy and business agenda: where does the responsibility of companies end and the role of governments begin, and by what (and whose) standards should this be judged?

Economic liberalization and deregulation have seen a massive increase in the flow of capital, goods and services across borders, opening new markets to foreign investment. At the same time the gaps between rich and poor around the world have widened and the world’s population is growing rapidly.

As privatization proceeds apace around the world, companies are increasingly responsible for providing services that were public-sector responsibilities in the past; areas such as healthcare provision by private companies and liberalization of energy markets focus more attention on the role of companies in the place of governments. The role of the private sector in provision of technical assistance around the world has also increased as corporations have become more involved in providing funding for intergovernmental bodies and as contractors in the delivery of donor assistance programmes. The overall balance of public- and private sector responsibilities is changing.

Globalization has given rise to new demands on corporations to exercise their power responsibly. There is a popular perception that in some markets the economic power and influence of corporations is much greater than that of the incumbent government. Some international NGOs have focused in on this, giving rise to new demands that companies investing in politically unstable economies such as the Sudan should use their power to encourage host country governments to spend the revenue that their investments generate for social benefit – not to wage wars or benefit political elites.

It is often pointed out that the turnover of the world’s largest companies is greater than the GNP of all but around 20 members of the United Nations. But individually even large companies account for only a fraction of global economic ouput: BP, Amoco and Arco together produce no more than 0.01%.

Globalization is not an entirely ‘neutral’ driver of corporate citizenship from a business perspective. Indeed, a powerful ‘backlash against globalization’ has now been set in motion, as witnessed by the public demonstrations surrounding recent World Trade Organization (WTO) and International Monetary Fund (IMF) meetings in Seattle and Washington.

Some proponents of corporate citizenship in the North see it as a way of countering the backlash against globalization – of reinvigorating the notion that trade and investment can bring overall social and environmental welfare gains. Encouragement of global corporate responsibility then becomes part of efforts to put ‘a human face on the global economy’.

One maxim seems to find resonance with all: that with power needs to come responsibility. Globalization, it is said, is transforming corporate responsibility from a choice into an imperative.6 But the extent of that responsibility remains a matter of hot debate.

4.         Commitments to Corporate Citizenship

There are numerous examples of commitments towards corporate citizenship. Many of them involve not only the private sector, but also the public sector and civil society organizations.

v     The Global Compact was proposed by the outgoing UN Secretary General, Kofi Annan, at Davos in January 1999. He called on business leaders to embrace and enact within their own corporate activities nine core principles derived from universally accepted agreements on human rights, labour and the environment. Today the Global Compact brings together several hundred companies, with some of the world’s leading trade union bodies, human rights and environmental organizations in a global learning forum, policy dialogues and variety of development projects. Companies engage in the initiative through the written support of their CEOs.

v     Tackling global health issues: The World Economic Forum Global Health Initiative (GHI) is designed to foster greater private sector engagement in the global battle against HIV/AIDS, tuberculosis and malaria. In cooperation with the World Health Organization and UNAIDS, the GHI brings together businesses, NGOs, civil society and academic institutions in a partnership, focusing on corporate best practices, resource gaps, partnership opportunities, philanthropy and the role of business in advocacy. The Global Business Council on HIV/AIDS is an international group of business leaders dedicated to advocating for an increased business response to AIDS both in the workplace and in the community. The Global Alliance for Vaccines and Immunization (www.vaccinealliance.org) was officially launched in January 2000 at Davos, with a mission of combining public and private resources and competencies to support immunization activities. It is a coalition of governments, the WHO, UNICEF and the World Bank; philanthropic foundations; the International Federation of Pharmaceutical Manufacturers Associations (IFPMA); and technical and research institutes.

v     Overcoming the digital divide: The ICT sector has engaged itself in a variety of policy dialogues and practical initiatives to bridge the ‘digital divide’ both within and between nations. Examples include: the G8 Digital Opportunity Task Force which consisted of leaders from the public, private and not-for-profit sectors; the UN’s multi-stakeholder ICT Task Force and the World Economic Forum’s Global Digital Divide Initiative. Business leaders are also supporting practical projects such as the Digital Partnership and Net Aid; and others such as those listed on the World Economic Forum website.

v     Investing in sustainable development: This has been an area of immense focus. The International Chamber of Commerce and World Business Council for Sustainable Development have established Business Action for Sustainable Development as a network and platform to provide business input and partnership examples to the World Summit for Sustainable Development in 2002.

v     Promoting good corporate governance: Business leaders are playing a role in several initiatives to promote good corporate governance. Examples include: The International Corporate Governance Network, pension funds and financial institutions with over $8 trillion in assets under management working towards global convergence on standards of governance; and business support for Transparency International to tackle corruption. Another aspect of good governance is the efforts to promote sustainability reporting such as the Global Reporting Initiative.

v     Corporate citizenship at the sector level: The World Business Council for Sustainable Development and UNEP have played an important role in promoting sector-based initiatives for sustainable development in industries as diverse as mobility, cement, pulp and paper, information technology, banking and finance. Other examples include the E7 network of electricity companies; the International Hotels Environment Initiative; and the Global Mining Initiative.

v     Supporting national development: At the national level business leaders are supporting initiatives focused on goals such as education, local enterprise and job creation, and rural development. Examples include: Philippine Business for Social Progress; the National Business Initiative in South Africa;  Instituto Ethos in Brazil;  Business in the Community in the UK;  and Landcare in Australia.

v     Engaging Tomorrow’s Leaders: Today’s business leaders are supporting networks such as the World Economic Forum’s Global Leaders for Tomorrow, which consists of young leaders from the public and private sectors and civil society, and AIESEC, the world’s largest student-run organization to promote sustainable development and corporate citizenship. A small but growing number of business schools have started to invest in research and teaching in this area supported by some CEOs.

 

5.         Progress of Corporate Citizenship in a Global Context

While the leadership challenge is especially apparent for executives in Europe and North America, it is also becoming a reality for many in Asia, Africa, the Middle East, and Latin America, especially those who aim to be global players – either doing business with or competing against the world’s top multinationals. Business leaders in each region are obviously influenced by different economic, social, cultural and political traditions, and different industry sectors face different types of corporate citizenship challenges. Despite these differences, the following trends in the concepts of corporate citizenship or corporate responsibility are common across geographic and sector boundaries:

1. From the corporate margins to the mainstream

2. From assertion to accountability

3. From paternalistic approaches to partnership

5.1.      From the corporate margins to the mainstream

In leading companies, corporate citizenship is moving beyond the boundaries of legal compliance and traditional philanthropy to become a more central factor in determining corporate success and legitimacy, with implications for corporate strategy, governance and risk management.

There is now growing recognition that global corporate citizenship is essentially about how the company makes its profits, everywhere it operates, not simply what it does with these profits afterwards. It is about how the company operates in three key spheres of corporate influence.

§         First, in its core business operations – in the boardroom, in the workplace, in the marketplace and along the supply chain.



Second, in its community investment and philanthropic activities.

Third, in its engagement in public policy dialogue, advocacy and institution building.



In all three spheres of corporate influence, the challenge for leadership companies is two fold:-

First, aim to ‘do minimal harm’ in terms of minimizing negative economic impacts, bad labour conditions, corruption, human rights abuses and environmental degradation that may result from a company’s operations. This is a goal that calls for management strategies such as compliance – with internationally accepted norms, guidelines and standards, such as the OECD Guidelines for Multinational Corporations and the UN Global Compact, as well as with national laws and regulation – and control of social and environmental risks, liabilities and negative impacts.

Second, aim to ‘do positive good’ in terms of creating new value for both the business and its stakeholders in the countries and communities in which it operates. This can be achieved through strategic philanthropy and community investment, which harnesses the company’s core competencies, products and services, not only its philanthropic cheques. Examples include, ICT companies supporting community projects to tackle the digital divide, financial companies supporting microcredit initiatives, and professional services firms sharing management expertise with local community organizations. More strategic, are efforts by companies to create new business value through developing new products, processes and technologies, and in some cases even transforming their business models, to serve untapped social and environmental needs, or facilitate entry into underserved markets. Examples include developing new markets for carbon emissions trading, creating new environmental technologies, and producing more affordable access to essential services such as clean water, energy, food, housing and medicines for the estimated 3 billion people who live on less than $2 a day.

A taskforce of the World Economic Forum, consisting of a group of over 40 CEOs and chairmen from 16 countries and representing 18 industry sectors signed a joint statement on global corporate citizenship. They agreed that: “The greatest contribution that we can make to development is to do business in a manner that obeys the law, produces safe and cost effective products and services, creates jobs and wealth, supports training and technology cooperation, and reflects international standards and values in areas such as the environment, ethics, labour and human rights. To make every effort to enhance the positive multipliers of our activities and to minimize any negative impacts on people and the environment, everywhere we invest and operate. A key element of this is recognizing that the frameworks we adopt for being a responsible corporate citizen must move beyond philanthropy and be integrated into core business strategy and practice.”

5.2. From assertion to accountability

A second key trend at the heart of the emerging corporate citizenship agenda is the growth in demands by stakeholders, including shareholders, for corporations to demonstrate greater accountability and transparency – and to do so not only in terms of their financial accounts and statements, but also in terms of their wider social, economic and environmental impacts.

Gone are the days when consumers, investors and the general public trusted all the information they received from companies and were relatively undemanding on what this information should cover in terms of corporate performance. In part this trust has been squandered by the recent series of corporate ethics scandals and governance failures. It has also been affected by a combination of increased democratization and press freedom around the world, easier access to more information through the Internet, greater public awareness of global issues through the media, increased consumer choice and sophistication, and higher societal expectations of the private sector.

In response to these trends, leading companies are being called on to be more accountable and more transparent to more stakeholders on more issues and in more places than ever before. In the wake of corporate governance and ethics scandals, there have been demands for greater financial accountability and transparency, resulting in increased shareholder advocacy and new regulations, such as Sarbanes-Oxley in the United States. At the same time, certain governments and stock exchanges are also calling for greater public disclosure on environmental and social performance, in areas such as carbon emissions, product safety, occupational health and safety, training and diversity. There are also growing calls for greater transparency on private sector engagement with governments on issues such as lobbying, financing political campaigns, payment of taxes and receipts of public procurement contracts and incentives.

In all of these areas, business leaders are facing new and challenging questions in terms of what to be accountable for, who to be accountable to, and how to actually measure and report non-financial performance in practice.

A number of global voluntary efforts are underway to develop standards, guidelines and procedures for measuring and reporting on corporate social and environmental performance. These range from multi-sector alliances, such as the Global Reporting Initiative, which is developing guidelines and indicators for public reporting on sustainability performance, to sector-focused efforts such as the Extractive Industries Transparency Initiative, which focuses on public disclosure of payments to governments by oil and mining companies, the Fair Labour Association in the apparel sector, the Equator Principles for project finance in the banking sector, and global framework agreements being negotiated between certain trade unions and global corporations. Growing numbers of Asian companies are engaging in these and other accountability initiatives.

5.3. From paternalistic approaches to partnerships

The third key trend in global corporate citizenship is a move away from more traditional, paternalistic attitudes that “the company and its senior executives knows best” to more genuine engagement, consultation and cooperation with key groups of stakeholders. There is growing recognition that the challenges we face, both as individual companies and nations and as a global community, are too great and too interdependent, and the resources for addressing these challenges too varied and too dispersed, for any one actor or sector to have all the solutions. New types of alliances between companies and other sectors, built on mutual respect and benefit, are becoming essential to both corporate success and societal progress.

The area of community investment offers a good example, where leading companies have moved away from traditional philanthropic approaches, focused on one way disbursement of charitable funds, to efforts aimed at engaging the core competencies of the company and building mutually beneficial partnerships between the company and non-profit or community organizations. Cisco Systems, for example, has been able to expand its Cisco Networking Academies program to over 10,000 academies in all 50 U.S. states and over 150 countries, working with partners ranging from the United Nations, the United States Agency for International Development and the Peace Corps, to local schools and nongovernmental organizations. In the Philippines, the Ayala Group has worked with Nokia, one of its key business partners, Pearson Education, the International Youth Foundation, the Department of Education, local authorities and parent-teachers associations to provide science materials to over 80 under-resourced schools. Just two of thousands of examples, through which companies, working in partnership with others, are providing education, training, and other opportunities to millions of young people and low-income communities around the world.

Some of the most interesting partnerships are in the form of strategic global or national alliances aimed at transforming not only individual corporate practices, but also influencing public policy frameworks and the broader enabling environment. National examples in Asia include the pioneering Philippines Business for Social Progress, the Thai Business Initiative for Rural Development and the Asia-Pacific Business Coalition Against HIV/AIDs.

In addition to community-level alliances between individual companies and nonprofit organizations, we are also witnessing the emergence of strategic global or national alliances aimed at transforming not only individual corporate practices, but also influencing public policy frameworks and the broader enabling environment. One example is the United Nations Global Compact, with over 2,000 corporate participants and some 30 national business networks, many of them from developing countries, working with UN agencies, trade unions and non-governmental organizations.

Through the power of collective action, the Global Compact seeks to advance responsible corporate citizenship so that business can be part of the solution to the challenges of globalization. It is a voluntary initiative with two objectives:

• Mainstream ten principles in the areas of environment, human rights, labour, and anti-corruption – all of which are based on international, intergovernmental agreements - into business activities and supply chains around the world;

• Catalyse business actions and partnerships in support of UN goals, especially the Millennium Development Goals.

Asian companies have been among the pioneers in supporting the Global Compact. In countries such as China, India, Indonesia, the Philippines, Thailand, South Korea and Australia, individual companies, stock exchanges, business associations and governments are starting to explore ways to implement the compact’s ten principles as core elements of sound business practice. In November 2005, the Chinese government will host a major Global Compact Summit, taking a vital leadership role at a time when global industrial capacity continues to shift to China and Chinese companies continue to increase their international investment and influence.

Concluding Remarks

Although local business conditions and cultures vary from country to country, the elements of what it takes to be a successful and sustainable business over the longer-term illustrate some common imperatives. Being a profitable, but also responsible corporate citizen is increasingly one of these imperatives. This requires business leaders to be committed to a set of clearly stated and publicly upheld values – underpinned by policies and standards that are applied everywhere the company operates, not only in its home market. It requires companies to have risk management systems and accountability structures in place to protect existing value, by minimizing any negative economic, social or environmental impacts and reputation damage arising from their business operations. It also requires companies to support learning, innovation and partnerships that help to create new value, by delivering new products and services that meet societal needs as well as creating shareholder value. And it calls for ongoing efforts to evaluate and measure progress and performance against each of these three areas.

In summary, regardless of industry sector or country, global corporate citizenship rests on four pillars: values; value protection; value creation; and evaluation. These four pillars not only underpin the long-term success and sustainability of individual companies, but are also a major factor in contributing to broader social and economic progress in the countries and communities in which these companies operate. Along with good governance on the part of governments, they offer one of our greatest hopes for a more prosperous, just and sustainable world.

Bill W. Johnson asked:


The right kind of clothing on the employees is the first and most powerful impression creator for clients and associates alike. That is the reason why corporate apparel is also known as power dressing. You need to dress up your employees in company uniforms to look powerful, just like you want your brand to be. And you can achieve that only with the right kind of corporate work wear.

Corporate clothing can make your employees look suave and dignified. Think about dressing them elegantly. Men could ideally wear a subtle colored full-sleeved shirt with sharp V-collars, which can be coordinated with suits or jackets when needed. Their corporate apparel must include sharp-creased trousers in a color that either complements or offsets the color of the shirt. The loops of these trousers must have broad loops to allow for their belts to pass through. Women would have a similar kind of corporate uniform, but they could do with skirts instead of trousers. You could of course use different colors for the women’s and the men’s corporate work wear.

Accessorizing the corporate clothing is important too. You can opt for belts, wristwatches, handkerchiefs and shoes and socks for your employees. Keeping a uniform code of corporate apparel for your employees makes the workplace more regulated and dignified. It automatically improves the work output of the place.

Once you have decided what kind of outfits you need for that corporate look, you have to see how can personalize the clothing. This is very important because, as an intelligent entrepreneur, you must always make an attempt at branding your image. If you already have a logo, you can get that logo embroidered onto your corporate uniforms. Give the logo to the manufacturers or stockers of the corporate clothing. They will digitize the logo and then get it worked onto the uniforms. With present day computerized techniques, embroidering logos has become a very elaborate art, and you can get high quality logos sewn on to your company uniforms.

You can also brand your company uniforms with your corporate colors. Just the colors without the actual name of the company written on the corporate work wear could also be a good option to customize your company uniforms. If you are looking at making your corporate uniforms look more personal, then you can get them screen printed with your company’s logo.

Corporate work wear does not just imply business uniforms that are worn in the office. It also includes clothing worn for other company related events, like sports jackets, golf wear, Friday casual dressing, etc. When placing orders for your corporate uniforms, if your budget allows you, you might also invest in some of these other corporate work wear for your employees. That will make sure your employees will carry your business brand even when they are not working at the office.

When your coworkers where corporate apparel with the company logo, there is a sense of pride from all members of the team. Customized corporate apparel can bring company’s even closer together. The pride in the company can also spill over to the local community because when employees are out and about they are showing their corporate pride and marketing the company you work for.

So take all opportunities to market your organization to all aspects of the community. Corporate apparel is a strong opportunity to market your organization.

T.VENAKATESWARA RAO asked:


CORPORATE GOVERNANCE-A COMPARATIVE  STUDY OF  SELECT PUBLIC SECTOR AND PRIVATE SECTOR COMPANIES IN INDIA

                                                      BY

                                Dr.V.V.S.K.PRASAD.,Professor

                                                       &

                          T. VENKATESWARA RAO., Asst.Professor

 

BACKGROUND

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor(employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.

Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis shareholders’ welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world (see section 9 below).

It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.

Report of SEBI committee (India) on Corporate Governance defines corporate governance as the 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. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.” The definition is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate Governance is viewed as ethics and a moral duty.

 

OBJECTIVES OF THE STUDY

Counterbalancing the very strong recent public interest in the corporate governance of private sector companies has been a vigorous interest in the governance of public sector organisations. While there are similarities between the two sectors in governance terms, there are also significant differences that shape the way government departments, authorities, corporations and even government business enterprises are organised and governed. If the public sector is looked at even more closely, there is a wide variety of forms, structures, processes and practices that can be discerned from agency to agency.

 The present study has multifold objectives :

1.      To compare and contrast corporate governance practices of Public sector and private sector companies in India.

2.      To examine whether there is any correlation between corporate governance practices and  the performance of the company.

3.      To Study the investors perception on the company having good governance practices.

4.      To understand common governance practices if any , in both public sector and private sector companies.

 

I. CORPORATE GOVERNANCE IN INDIAN PRIVATE SECTOR COMPANIES

 

1. GRASIM

Code of Conduct (hereinafter referred to as “the Code”) has been framed and adopted by Grasim Industries Limited (hereinafter referred to as “the Company”) in compliance with the provisions of Clause 49 of the Listing Agreements entered into by the Company with the Stock Exchanges.

Applicability

The Code applies to the Members of Board of Directors (hereinafter referred to as “Board Members) and Members of the Senior Management Team of the Company one level below the Executive Directors, viz. Business Heads, Unit Heads, Presidents, Joint Presidents and all other executives having similar or equivalent rank in the Company and the Company Secretary of the Company (hereinafter referred to as “Senior Managers”).

The Company Secretary shall be the Compliance Officer for the purpose of this Code.

The Code shall come into force with effect from 1 January 2006 and future amendments / modifications shall take effect from the date stated therein.

The Code shall be posted on the website of the Company.

Code of conduct

The Board Members and Senior Managers shall observe the highest standards of ethical conduct and integrity and shall work to the best of their ability and judgement.

The Board Members and the Senior Managers of the Company:

1

Shall maintain and help the Company in maintaining highest degree of Corporate Governance practices.

2

Shall act in utmost good faith and exercise due care, diligence and integrity in performing their office duties.

3

Shall ensure that they use the Company’s assets, properties, information and intellectual rights for official purpose only or as per the terms of their appointment.

4

Shall not seek, accept or receive, directly or indirectly, any gift, payments or favour in whatsoever form from Company’s business associates, which can be perceived as being given to gain favour or dealing with the Company and shall ensure that the Company’s interests are never compromised.

5

Shall maintain confidentiality of information entrusted by the Company or acquired during performance of their duties and shall not use it for personal gain or advantage.

6

Shall not commit any offences involving morale turpitude or any act contrary to law or opposed to the public policy.

7

Shall not communicate with any member of press or publicity media or any other outside agency on matters concerning the Company, except through the designated spokespersons or authorised otherwise.

8

Shall not, without the prior approval of the Board or Senior Management, as the case may be, accept employment or a position of responsibility with any other organization for remuneration or otherwise that are prejudicial to the interests of the Company and shall not allow personal interest to conflict with the interest of the Company.

9

Shall in conformity with applicable legal provisions disclose personal and/ or financial interest in any business dealings concerning the Company and shall declare information about their relatives (spouse, dependent children and dependent parents) including transactions, if any, entered into with them.

10

Shall ensure compliance of the prescribed safety & environment related norms and other applicable codes, laws, rules, regulations and statutes, which if not complied with may, otherwise, disqualify him/ her from his/ her association with the Company.

11

Shall ensure compliance with SEBI (Prohibition of Insider Trading) Regulations, 1992 as also other regulations as may become applicable to them from time to time.

Annual compliance reporting:

Board Member and Senior Managers shall affirm compliance with this Code on an annual basis as at the end of the each financial year of the Company (as per Appendix I within 7 days of the close of every financial year).

Acknowledgement of receipt of the code

Each Board Members and Senior Managers both present and future shall acknowledge receipt of the Code or any modification(s) thereto, in the acknowledgement form annexed to this Code as Appendix - II and forward the same to the Compliance Officer.

Any breach of the aforesaid Code brought to the notice of the Compliance Officer or any member of the Board or Senior Management shall be reported to the Board of Directors of the Company for necessary action.

2. ITC

 ITC’s Corporate Governance initiative is based on two core principles. These are :

         i.            Management must have the executive freedom to drive the enterprise forward without undue restraints; and

This freedom of management should be exercised within a framework of effective accountability.

ITC believes that any meaningful policy on Corporate Governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not only not misused, but is used with care and responsibility to meet stakeholder aspirations and societal expectations.

Cornerstones

From the above definition and core principles of Corporate Governance emerge the cornerstones of ITC’s governance philosophy, namely trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these leads to the creation of the right corporate culture in which the company is managed in a manner that fulfíls the purpose of Corporate Governance.

Trusteeship :

ITC believes that large corporations like itself have both a social and economic purpose. They represent a coalition of interests, namely those of the shareholders, other providers of capital, business associates and employees. This belief therefore casts a responsibility of trusteeship on the Company’s Board of Directors. They are to act as trustees to protect and enhance shareholder value, as well as to ensure that the Company fulfils its obligations and responsibilities to its other stakeholders. Inherent in the concept of trusteeship is the responsibility to ensure equity, namely, that the rights of all shareholders, large or small, are protected.

Transparency :

ITC believes that transparency means explaining Company’s policies and actions to those to whom it has responsibilities. Therefore transparency must lead to maximum appropriate disclosures without jeopardising the Company’s strategic interests. Internally, transparency means openness in Company’s relationship with its employees, as well as the conduct of its business in a manner that will bear scrutiny. We believe transparency enhances accountability.

Empowerment and Accountability :

Empowerment is an essential concomitant of ITC’s first core principle of governance that management must have the freedom to drive the enterprise forward. ITC believes that empowerment is a process of actualising the potential of its employees. Empowerment unleashes creativity and innovation throughout the organisation by truly vesting decision-making powers at the most appropriate levels in the organisational hierarchy.

ITC believes that the Board of Directors are accountable to the shareholders, and the management is accountable to the Board of Directors. We believe that empowerment, combined with accountability, provides an impetus to performance and improves effectiveness, thereby enhancing shareholder value.

Control :

ITC believes that control is a necessary concomitant of its second core principle of governance that the freedom of management should be exercised within a framework of appropriate checks and balances. Control should prevent misuse of power, facilitate timely management response to change, and ensure that business risks are pre-emptively and effectively managed.

Ethical Corporate Citizenship :

ITC believes that corporations like itself have a responsibility to set exemplary standards of ethical behaviour, both internally within the organisation, as well as in their external relationships. We believe that unethical behaviour corrupts organisational culture and undermines stakeholder value.

 

3. Bajaj

Code of Conduct for Directors and Members of Senior Management

This code of conduct shall apply to the directors and members of the senior management of Bajaj Auto Limited (referred to hereinafter as BAL or the Company).

For this code, members of the senior management (hereinafter referred to as `senior managers’) shall mean those personnel of the company, who are members of the core management team, but shall exclude the whole-time directors.

Directors and senior managers shall observe the highest standards of ethical conduct and integrity and shall work to the best of their ability and judgement. Directors and senior managers shall be governed by the rules and regulations of the company as are made applicable to them from time to time.

Directors and senior managers shall affirm compliance with this code on an annual basis as at the end of each financial year.

Code of conduct:

Directors and senior managers shall ensure that they use the company’s assets, properties and services for official purposes only or as per the terms of appointment. Directors and senior managers shall not receive directly or indirectly any benefit from the company’s business associates, which is intended or can be perceived as being given to gain favour for dealing with the company. Directors and senior managers shall ensure the security of all confidential information available to them in the course of their duties. No director or senior manager, other than the designated spokespersons shall engage with any member of press and media in matters concerning the company. In such cases, they should direct the request to the designated spokespersons. Directors and senior managers shall not engage in any material business relationship or activity, which conflicts with their duties towards the company. Senior managers shall not, without the prior approval of the managing director of the company, accept employment or a position of responsibility with any organisation for remuneration or otherwise. In case of Whole-time Directors, such prior approval must be obtained from the board of directors of the company. Directors and senior managers shall declare information about their relatives (spouse, children and parents) employed in the company.

Senior managers shall follow all prescribed safety and environment-related norms.

 

 

 

4.Cipla

 

As required under revised Clause 49 of the Listing Agreement the following code of conduct has been approved by the Board of Directors and is applicable to the Directors and Senior Management of the Company.

1. Ethical conduct

All directors and senior management employees shall deal on behalf of the Company with professionalism, honesty, integrity as well as high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be as such by third parties

2. Conflict of interest

business, relationship or activity, which might detrimentally conflict with the interest of the Company

 

3. Transparency

 

All directors and senior management employees of the Company shall ensure that their actions in the conduct of business are totally transparent except where the needs of business security dictate otherwise. Such transparency shall be brought about through appropriate policies, systems and processes.

 

4. Legal compliance

All directors and senior management employees of the Company shall at all times ensure compliance with all the relevant laws and regulations affecting operations of the Company. They shall abreast of the affairs of the Company and be kept informed of the Company’s compliance with relevant laws, rules and regulations. In the event that the implication of law is not clear, the course of action chosen must be supported by eminent legal counsel whose opinion should be documented.

 

5. Rightful use of company’s assets

 

All the assets of the Company both tangible and intangible shall be employed for the purpose of conducting the business for which they are duly authorized. None of the assets of the Company should be misused or diverted for personal purpose.

 

6. Cost consciousness

All the directors and senior management employees of the Company should strive for optimum utilization of available resources. They shall exercise care to ensure that costs are reasonable and there is no wastage. It shall be their duty to avoid ostentation in Company expenditure.

 

7. Confidential information

All directors and senior management employees shall ensure that any confidential information gained in their official capacity is not utilized for personal profit or for the advantage of any other person. They shall not provide any information either formally or informally to the press or to any other publicity media unless specifically authorized to do so. They shall adhere to the provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992.

 

8. Relationships with Suppliers and Customers

 

The Directors and senior management employees of the Company during the course of interaction with suppliers and customers, shall neither receive nor offer or make, directly and indirectly, any illegal payments, remuneration, gifts, donations or comparable benefits which are intended or perceived to obtain business or uncompetitive favours for the conduct of its business. However this is not intended to include gifts of customary nature

9. Interaction with Media

 

The Directors and senior management employees other than the designated spokespersons shall not engage with any member of press and media in matters concerning the Company. In such cases, they should direct the request to the designated spokespersons.

 

10. Safety and Environment

 

The Directors and senior management employee shall follow all prescribed safety and environment-related norms.

 

5. HINDUSTAN UNILEVER:

Hindustan Unilever Limited believes that for a Company to be successful, it must maintain global standards of Corporate Conduct towards all its stakeholders. The Company’s foundation has therefore been rooted to stringent Corporate Governance principles. At Hindustan Unilever, we believe that the principles of fairness, transparency and accountability are the cornerstones for good governance. The HUL Code of Business Principles reflects the Company’s commitment to these principles. It is the Company’s endeavour to continue to achieve highest governance levels.

As regards the compliance with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company is in full compliance with the norms and disclosures.

BOARD OF DIRECTORS

The Board of Directors of the Company represents an optimum mix of professionalism, knowledge and experience. The total strength of the Board of Directors of the Company is 10 Directors comprising a Non-Executive Chairman, four Executive Directors and five Non-Executive Independent Directors.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee of the Company is entrusted with the responsibility to supervise the Company’s internal control and financial reporting process. The Audit Committee also looks into controls and security of the Company’s critical IT applications,

Remuneration and Compensation Committee

The Remuneration Committee is vested with all the necessary powers and authority to ensure appropriate disclosure on the remuneration of whole-time Directors and to deal with all the elements of remuneration package of all such Directors within the limits approved by the members of the Company. The Compensation Committee administers the stock option plan of the Company.

Shareholder/Investor Grievances Committee

The Committee specifically looks into redressing of investors’ complaints with respect to transfer of shares, non-receipt of shares, non-receipt of declared dividends and ensure expeditious share transfer process. The Committee also monitors and reviews the performance and service standards of the Registrar and Share Transfer Agents of the Company and provides continuous guidance to improve the service levels for investors..

Other Functional Committees

Apart from the above statutory committees, the Board of Directors have constituted other functional committees such as committee for approving disposal of surplus assets of the Company, committee for allotment of shares under ESOP to raise the level of governance as also to meet the specific business needs.

6.HDFC BANK:

Introduction

This Code of Ethics / Conduct intends to ensure adherence to highest business and ethical standards while conducting the business of the Bank and compliance with the legal and regulatory requirements, including compliance of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and regulations framed thereunder by the Securities and Exchange Commission of USA and other statutory and regulatory authorities in India and USA. The Bank values the ethical business standards very highly and intends adherence thereto in every segment of its business.

Applicability

This Code of Ethics/Conduct is applicable to the following persons.

§                       The Board Members

Officials of the Bank one level below the Board

Ethical Conduct

The Board members / Officials shall engage in and promote honest and ethical conduct of business, including the ethical handling of actual and / or apparent conflicts of interest between personal and professional relationships.

Conflict of Interest

The Board members / Officials shall avoid conflict of interest and disclose to the Board any material transaction or relationship that reasonably could be expected to give rise to such a conflict.

Confidentiality of Information

The Board members / Officials shall ensure and take all reasonable measures to protect the confidentiality of non-public information about the Bank, its business, customers and other materially significant information obtained or created in connection with any activities with the Bank and to prevent the unauthorised disclosure of such information unless required by applicable laws or regulations or legal or regulatory process.

Disclosure of Information

The Board members / Officials shall endeavor to produce full, fair, accurate, timely and understandable disclosures in reports and documents that the Bank files with or submits to the Securities and Exchange Commission and other regulators and in other public communications made by the Bank

Compliance with Governmental Laws, Rules and Regulations

The Board members / Officials shall comply with all the applicable governmental laws and the applicable rules and regulations.

Variation of the Code and Waivers

The Code shall be reviewed from time to time for updation thereof. Any variation in the Code or any waivers from the provisions of the Code shall be approved by the Board and shall be disclosed on the Bank’s website.

Contract or Term of Employment

Nothing in this Code or other related communications by itself creates or implies an employment contract or terms of employment.

Violation of the Code

The Board shall have the powers to take necessary action in case of any violation of the code.

 

 

II . Corporate Governance in Public sector Companies

 

Keeping in view the importance and role of independent directors in the good

governance of companies, a review was undertaken in respect of all listed government

companies with the objective of assessing the compliance with the provisions of Clause 49 of

the Listing Agreement relating to independent directors on the Board. This review was

primarily based on the information and documents obtained from the Management of the

companies concerned. The review of composition of the Board as on 30 June 2007 of all the

44 Listed government companies (excluding five deemed government companies covered by

Section 619B of the Companies Act, 1956) revealed the following:

(i)

There were no independent directors on the Board of nine listed government

companies given below:.

S. No                                Name of the company

1              Minerals and Metals Trading Corporation Ltd.

2             State Trading Corporation Ltd.

3             Container Corporation of India Ltd.

4             Hindustan Copper Ltd.

5              National Aluminum Co. Ltd.

6             Balmer Lawrie Co. Ltd.

7            Hindustan Cables Ltd.

8             Madras Fertilizers Ltd.

9             The Fertilizers and Chemicals Travancore Ltd.

(ii)

In 21 listed government companies, the Board did not have the required number of independent directors.

Thus, out of 44 listed government companies, the Board of 30 companies had not been

constituted as per clause 49 of the Listing Agreement.

Constitution and composition of Audit Committee in listed government

companies

Audit Committee is by far the most important working committee of the Board in the

case of a government company with an extensive role in ensuring proper financial reporting and adequacy of internal controls over such reporting. The role of Audit Committees in government companies is closely aligned to C&AG’s constitutional and statutory role in promoting fairness and transparency in financial reporting. A limited review was accordingly undertaken in respect of listed government companies with the objective of assessing the  compliance by these companies with various provisions of clause 49 of the Listing Agreement relating to constitution and composition of the Audit Committee. This review was primarily based on the information and documents obtained from the Management of the  companies concerned.

 

As required by Clause 49 of the Listing agreement, the Audit Committee should have

minimum three directors as member and two thirds of which should be independent directors. As on 30 June 2007, in listed government companies revealed that an Audit Committee  existed in all listed government companies. However, the following non-compliances were  noticed with respect to composition of Audit Committee:

(a)

In the following seven government companies , the Audit Committee did not consist

of required number of independent directors:

1.India Tourism Development Corporation Ltd

.2 National Fertilizers Ltd.

 3.Mangalore Refinery and Petrochemicals Ltd.

 4.Hindustan Photo Films Mfg. Co. Ltd.

 5.Dredging Corporation of India Ltd.

 6.Hindustan Fluorocarbons Ltd.

 7.Mahanagar Telephone Nigam Ltd.

 

 (b)There was no independent director in the Audit Committee of nine listed government

companies as mentioned in para 3.5.2(i) and also in case of IRCON International Ltd.

(c) Though the Board of Bharat Immunological Biologicals Corporation Ltd. consisted of

required number of independent directors, the Audit Committee did not consist of two thirds

independent directors as there was only one independent director out of three directors.

 

(d) In case of Neyveli Lignite Corporation Limited, there was only one independent

director, as on 31 March 2007, on the Audit Committee of four members. The compliance

with Clause 49 of the Listing Agreement was made only on 1 June 2007 by induction of three

independent directors on the Audit Committee.

(e) There was no Audit Committee during 2006-07 in case of Hindustan Organics

Chemicals Ltd. However, the Committee was constituted by the Company on 28 May 2007.

 

Thus, the Audit Committee of 18 Central Government listed company had not been

constituted as per Clause 49 of the Listing Agreement.

 

Non-official Directors on the Board of unlisted government companies

The DPE’s guideline on composition of Board of Directors of CPSEs issued in

March, 1992 require that at least one-third of the Directors on the Board of a CPSE should

consist of non official directors. A limited review was undertaken by Audit in respect of all

unlisted government companies in operation with the objective of assessing the compliance

by these companies with the DPE’s guideline relating to non-official directors on the Board.

This review was primarily based on the information and documents obtained from the

Management of the companies concerned. The review of composition of the Board of

unlisted companies as on 30 June 2007 revealed the following:

(i) There was no non-official director on the Board of 48 government companies

 did not have one-third non-official directors as on 30 June 2007.

Thus, the Board of 64 unlisted government companies had not been constituted as per the

Department of Public Enterprises guideline.

 

Constitution and Composition of Audit Committee in unlisted government

companies

As required by Section 292A of the Companies Act, 1956, every public limited

company having paid up capital of not less than Rs. five crore shall constitute an Audit

Committee at the Board level consisting of minimum of three directors and two thirds of

which shall be directors other than Managing or whole time Directors. A limited review was

undertaken with respect to constitution and composition of Audit Committee, as on 30 June

2007, in unlisted government companies in operation covered by Section 292A based on the

information and documents obtained from the Management of the companies concerned, and

the following instances of non-compliance were noticed:

(a) No Audit Committee was formed by the following companies:

S. No                           Name of the company

1                      Richardson & Cruddas (1972) Ltd.

2                      HMT Machines Tools Ltd.

3                      HMT Watches Ltd.

4                      Spices Trading Corporation Ltd.

5                      Bharat Heavy Plates & Vessels Ltd.

(b) Audit Committee formed by Indian Renewable Energy Development Agency Ltd.

consisted of two directors as against the requirement of minimum three. Further, the

Committee did not consist of two thirds of directors as directors other than Managing or

whole-time directors as there was only one such director.

 

Constitution of Audit Committee by unlisted government companies not covered

by Section 292A of the Companies Act, 1956

 

Thirty unlisted government companies had formed Audit

Committees as good governance practice, though these were not required to do so as per

Section 292A of the Companies Act, 1956

 

CONCLUSION

 

The corporate governance practices of both public sector and private sector companies are almost similar. We found that the corporate governance practices exert great influence on the performance of the company. Companies which are having good governance practices will have good image among the investors and public as a whole.

Though a lion’s share of the focus in the Satyam episode was on the role of the independent directors, experts believe the role of auditors is now in spotlight.

Experts believe that it is the institutional investors who have the tools, bandwidth and clout to extract information and play an activist role (as had happened in Satyam’s case) in ensuring that managements don’t go off-track. If institutional investors act collectively, they can demand the required changes at companies they have invested in. While the corporate governance framework in the country is seen at par with other developed markets, the same has to be implemented in ‘letter as well as spirit’.

Additionally, shareholders should ensure that the composition of Board of Directors is a balanced mix of independent directors and management appointees. This would help keep a check on the internal processes of the company. With shareholder activism on the rise, the proactive role of institutional investors will also make the company management more accountable. While things have improved substantially over the last five years, experts believe that more needs to be done, which will further improve disclosure levels and make managements accountable.

At the retail shareholder level, one could look at a company’s past track record (including significant events that reflect management excesses), qualitative and quantitative disclosures (vis-a-vis peers) and consistency in delivering on promises. Experts believe that more rigorous vetting is needed when small and medium companies are considered for investment.

Good public sector governance relies on keeping pace with best practice in private sector corporate governance. That is, of harnessing the potential that corporate governance principles and practices can offer. Importantly, however, it also requires an understanding of the tensions and gaps that arise in the transposition of corporate governance from the private to public sector, so that public sector corporate governance can be modified accordingly.

                                                       ********

Wayne M Davies asked:


or an effective tax reduction strategy for your small business? This article explains how to reduce your taxes by choosing to be taxed as an S corporation. Question: What do all the following small business owners have in common? 1) C corporation shareholders; 2) sole proprietors; 3) partnership partners; and 4) limited liability company (LLC) owners who are being taxed like a sole proprietorship or a partnership. Answer: Each of these entity types has the potential to pay less tax by choosing to be taxed like an S corporation. C corporation owners face the dreaded double taxation of corporation profits. Any corporate profits are usually taxed twice. The corporation must pay its own corporate income tax on those profits. And if the corporation distributes those profits to the shareholders as dividends, those dividends get taxed a second time on the personal income tax returns of the individual shareholders. Ouch! Sole proprietors, partnership partners and LLC owners all face the dreaded self-employment (SE) tax on their business profits. And unlike an employee, they pay twice as much SE tax (15.3%) than their employee counterparts pay in payroll tax (7.65%). What are all these small business owners to do? One option is to choose to be taxed like an S corporation. An existing C corporation that switches to S corporation status can avoid the double taxation of corporate profits. This is possible because an S corporation typically doesn’t pay any corporate income tax on profits. The profits are only taxed to the individual shareholders on their personal income tax return. End result: no double taxation. Sole proprietors, partners and LLC members can legally reduce SE tax by receiving reasonable employee compensation from the S corporation. If this compensation is less than the total business profit, the remaining profit legally avoids payroll tax, because only employee wage/salary is subject to payroll taxes. How do you “choose” to be taxed like an S corporation? This choice is made by filing Form 2553 with the IRS, Election by a Small Business Corporation. Think of this form as an application by an existing small business to be treated like an S corporation for tax purposes. Here’s how it works for each entity type: C corporation. File form 2553. That’s all there is to it. You don’t have to shut down the existing corporation; nor do you have to form a new corporation. The existing corporation continues to exist, just like it did before, as a corporation in good standing of the state in which the corporation was formed. Limited liability company. Likewise, just file Form 2553. You don’t have to shut down the LLC and/or form a new corporation. The original LLC remains intact for legal purposes. You simply submit Form 2553 in order to tell the IRS you want your business treated like an S corporation instead of a sole proprietorship or a partnership. Sole proprietors and partners. Before filing Form 2553, you must form a corporation or LLC. Once this new entity is set up, submit Form 2553. Important: There are specific rules regarding the timing of the Form 2553 filing, so be sure to read the instructions carefully or consult with your tax professional.

Garrett Sutton asked:


If you have been considering forming a corporation or other business entity to provide yourself with limited liability and financing options in your business venture, you have made an important first step. You may have compared the tax benefits of corporations and limited liability companies or limited partnerships. If you have done so, you likely realized that corporations are taxed twice, while limited liability companies and limited partnerships are taxed once. While a corporation’s profits are taxed once as the corporation’s income and again when the profits are distributed as dividends, a limited liability company or limited partnership’s profits flow through the entity and are only taxed once as personal income to the individual member of the limited liability company or partner in the limited partnership. This is referred to as flow-through taxation. Based solely on the tax treatment of corporations, you may be prepared to use a limited liability company or limited partnership for your business.

While limited liability companies and limited partnerships feature outstanding charging order protection, Nevada has recently extended such protection to corporations with between two and seventy-five shareholders.

Before you decide which business entity to use, there is one more option for you to consider. If you choose to use a limited liability company or a limited partnership, your business may limit its financing options. Financing for a limited liability company or a limited partnership may not be as readily available as financing for a corporation, because interests in such entities are not as transferable as interests, or shares of stock, in a corporation. An S-corporation is the alternative that provides both financing options and flow-through taxation; however, to be treated as an S-corporation, your business must do the following:

• Incorporate the Business - As with a regular corporation, referred to as a C-corporation, an S-corporation must prepare and file Articles of Incorporation with the state, prepare and operate under Bylaws, operate under a Board of Directors and corporate officers, and engage in corporate formalities.

• File an S-Corporation Election Form - To be eligible for S-corporation tax treatment, the corporation must (1) be a corporation organized in any U.S. state, (2) not be an ineligible corporation (certain types of businesses are not eligible), and (3) have only one class of stock. If eligible, the corporation may file an S-corporation election form, Form 2553, with the Internal Revenue Service within forty-five days after incorporating. While this will allow flow-through federal taxation, it is important to note that five states do not recognize S-corporations and may tax the corporation as a C-corporation. It is also important to note that S-corporations are not eligible for certain tax deductions that C-corporations may enjoy.

• Notice and Obey S-Corporation Limitations - Once the corporation has made its S-corporation election, it must notice and obey the limitations on S-corporations to maintain its flow-through tax status. If the corporation violates any of the following limitations, it will lose S-corporation status and will not be eligible for flow-through taxation for five years: (1) it must have one hundred or fewer shareholders; (2) all of its shareholders must be individuals, descendants’ estates, estates of individuals in bankruptcy, or certain trusts, because business entities may not be shareholders; and, (3) all of its shareholders must either be United States citizens or resident aliens in the United States (nonresident aliens may not be shareholders). If the corporation loses its flow-through tax status, the Internal Revenue Service will treat it as a C-corporation.

Every business is unique. Your business’s form should be based on your specific circumstances. While the limitation on the number and types of shareholders allowed in S-corporations may affect financing options, such limitations may have less practical importance than the limitations on financing options created by using a limited liability company or a limited partnership. Accordingly, S-corporations’ tax benefits, management structure and transferability of shares may provide the benefits that your business needs in an entity that also provides you with limited liability. By considering your business’s options and choosing the best available business form, you will ensure that you take advantage of available opportunities.

Claysphere Rivera asked:


Corporation laws are creation of the legislature of each jurisdiction intended to regulate the constitution, organization of a corporation as well as the conduct of its affairs and business.

Corporation laws are broad enough to comprehend and composed of different areas that are all complicated and unique.

Like any other areas of law where different constitutive laws embodied it, also corporation law had a broad spectrum and has its set of areas where specialization is viable.

In different light, in California, several corporate entities do business in the whole region. These corporations have diverged purposes and business endeavors ranging from manufacturing of general consumer products-including foods, pharmaceuticals products, banking transactions, finance, insurance, stock industries, and real estate and construction industries.

With these diversified corporate undertakings, no doubt that it engages in different transactions in the regular course of its business.

Varied corporate transactions ranging from finance, stocks, securities, credit transactions, trusts, real estate, taxation, commercial transactions and other forms of commercial contracts are just some of the matters that a corporation needs to deal with.

With these diversified transactions, corporate law areas become broad and much harder to master, especially when varying rules and provisions applied.

It was in that sense, that specialization on a given area of corporation law was waged. Of course, these were devised not only for convenience or practical purpose but also for giving a higher sense of legal services in specialized corporate problems.

Foremost from the specialized areas in corporation law, is the area of taxation in a corporate context. Tax implications in corporation, needs specialized treatment of a California corporate law attorney who had vast knowledge on this aspect. The corporate and tax planning of a corporation is complicated necessitating a careful consideration of an expert corporate-tax attorney.

Second from the list of corporate specialized areas is dealing with securities. Stock trading and other mode of security transactions are customary in corporate transactions. Though separate law regulates securities, it is considered as a specialized area of corporate law for it had direct connection with corporate affairs.

Other possible areas include corporate litigations. These legal issues are considered special area considering that different mechanics are applied in diverged corporate litigations. Different rules, different tribunals and different approaches are required in corporate litigations.

Added to that, corporate disputes resolutions have different degrees and avenue for filing that needs specialized treatment of an attorney who is an expert in litigation of this kind.

Another specialized area of corporate law is the intellectual property, which includes unfair competition, fraud, copyrights and violation of trade secrets. Still, a different set of law regulates this area. But considering its direct relation with the corporate scenario, it is a specialized corporation law area.

Actually, there are several specialized areas in the whole spectrum of corporation laws. The abovementioned are the general one.

With the evolution of business in California, and with the great demand of legal services, huge number of attorneys in California had ventured into the corporate law practice.

Many California corporate law attorneys had specialized in various areas of the corporation law intended to give sophisticated services to sophisticated world of doing business.

Our corporate attorneys are well equipped with the most effective strategies in handling any type of cases involving the California Business Laws. For your legal concerns, log on to our website and fill out our free case evaluation form.

Boris Tomson asked:


A corporation is a separate legal entity, usually used to conduct business. Corporations exist as a product of corporate law, and their rules balance the interests of the shareholders that invest their capital and the employees who contribute their labor. People work together in corporations to produce. In modern times, corporations have become an increasingly dominant part of economic life. People rely on corporations for employment, for their goods and services, for the value of the pensions, for economic growth and social development.http://corporate-capital.blogspot.com

The defining feature of a corporation is its legal independence from the people who create it. If a corporation fails, shareholders only stand to lose their investment, and employees will lose their jobs, but neither will be liable for debts that remain owing to the corporation’s creditors. This rule is called limited liability, and it is why corporations end with “Ltd.” (or some variant like “Inc.” and “plc”). http://corporate-capital.blogspot.com

Despite not being persons, corporations are recognized by the law to have rights and responsibilities like actual people. Corporations can exercise human rights against real individuals and the state,[1] and they may be responsible for human rights violations.Just as they are “born” into existence through its members obtaining a certificate of incorporation, they can “die” when they lose money into insolvency. Corporations can even be convicted of criminal offences, such as fraud and manslaughter. Five common characteristics of the modern corporation, according to Harvard University Professors Hansmann and Kraakman are…

delegated management, in other words, control of the company placed in the hands of a board of directors limited liability of the shareholders (so that when the company is insolvent, they only owe the money that they subscribed for in shares) .

investor ownership, which Hansmann and Kraakman take to mean, ownership by shareholders.

separate legal personality of the corporation (the right to sue and be sued in its own name)

transferrable shares (usually on a listed exchange, such as the London Stock Exchange, New York Stock Exchange or Euronext in Paris) http://corporate-capital.blogspot.com

Ownership of a corporation is complicated by increasing social and economic interdependence, as different stakeholders compete to have a say in corporate affairs. In most developed countries excluding the English speaking world, company boards have representatives of both shareholders and employees to “codetermine” company strategy. Calls for increasing corporate social responsibility are made by consumer, environmental and human rights activists, and this has led to larger corporations drawing up codes of conduct. In Australia, Canada, the United Kingdom and the United States, corporate law has not yet stepped into that field, and its building blocks remain the study of corporate governance and corporate finance at http://corporate-capital.blogspot.com