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CG Models

The document outlines various models of corporate governance, including the Anglo-American, German, Japanese, and Indian models, highlighting their unique characteristics and structures. Each model has its own advantages and disadvantages, reflecting the diverse approaches to governance worldwide. The Indian model is noted as a blend of the Anglo-American and German models, influenced by different types of corporations present in the country.

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Satya Kumar
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57 views12 pages

CG Models

The document outlines various models of corporate governance, including the Anglo-American, German, Japanese, and Indian models, highlighting their unique characteristics and structures. Each model has its own advantages and disadvantages, reflecting the diverse approaches to governance worldwide. The Indian model is noted as a blend of the Anglo-American and German models, influenced by different types of corporations present in the country.

Uploaded by

Satya Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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 ANGLO AMERICAN

MODEL
 GERMAN MODEL
 JAPANESE MODEL
 INDIAN MODEL
MODELS OF
CORPORATE
GOVERNANCE
•Corporate governance systems vary around the world. This
because in some cases, corporate governance focuses on link
between a shareholder and company, some on formal board
structures and board practices and yet others on social
responsibilities of corporations.

•However, basically, corporate governance is seen as the process


by which organizations are run.

•There is no one model of corporate governance which is


universally acceptable as each model has its own advantages and
disadvantages.

• Following are some of the models of corporate governance:


Anglo-American
Model
•This model is also called an ‘Anglo-Saxon model’ and is used as
basis of corporate governance in U.S.A, U.K, Canada, Australia, and
some common wealth countries.

•The shareholders appoint directors who in turn appoint the managers


to manage the business. Thus there is separation of ownership and
control.

•The board usually consist of executive directors and few


independent directors. The board often has limited ownership stakes
in the company. Moreover, a single individual holds both the position
of CEO and chairman of the board.
 This system (model) relies on effective communication
between shareholders, board and management with all
important decisions taken after getting approval of
shareholders (by voting).
Elect
f Shareholders
Board of
Directors Stakeholders
d (Supervisor)
Appoints
and
supervises
Officers

(Manage
r)

Monitor
Manag s &
e regulate Regulatory/
Creditors
s Le gal
Company system
German
Model
•This is also called as 2 tier board model as there are 2 boards viz.
The supervisory board and the management board. It is used in
countries like Germany, Holland, France, etc.

•Usually a large majority of shareholders are banks and financial


institutions. The shareholder can appoint only 50% of members to
constitute the supervisory board. The rest is appointed by
employees and labour unions.
Appoint
Appoint - Supervisory 50%
50% Board

Appoint
and
supervises
Employees Management
Shareholder
and Labour Board (including
unions Labour Relation
Board)

Manag
e

Ow
Company n
Japanese
Model
•This model is also called as the business network model,
usually shareholders are banks/financial institutions, large
family shareholders, corporate with cross-shareholding.

•There is supervisory board which is made up of board of


directors and a president, who are jointly appointed by
shareholder and banks/financial institutions. This is rejection of
the Japanese ‘keiretsu’- a form of cultural relationship among
family controlled corporate and groups of complex interlocking
business relationship, where cross shareholding is common
most of the directors are heads of different divisions of the
company. Outside director or independent directors are rarely
found of the board.
acts in
Supervisory
Appoin emergencies
Board (including Provide
t President) s
manag
Ratifies the
er s
President’s decision

President

Shareholders Consult Main bank


s
Executive
Management
(Primarily Board
of Directors)
Manage
rs Provides
Ow
Company Loan
n
Own
Indian
model
•The model of corporate governances found in India is a mix of the
Anglo-American and German models. This is because in India, there
are three types of Corporation viz. private companies, public
companies and public sectors undertakings (which includes statutory
companies, government companies, banks and other kinds of
financial institutions).

•Each of these corporation have a distinct pattern of shareholding.


For e.g. In case of companies, the promoter and his family have
almost complete control over the company. They depend less on
outside equity capital. Hence in private companies the German
model of corporate governance is followed.

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