CG_Wk2-Lec-28Oct2011 - Corporate Governance Week 2 Lec The...

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Corporate Governance Week 2 Lec 28/10/2011
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The Role of Owners (Specifically Institutional Investors in the Corporate Governance
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3 Shareholders: Ownership What is a Shareholder in a Company? What is their position/role in the company?
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4 Shareholders: Ownership Shareholders are often referred to as the owners. Generally there are accepted principles that; Owner has the right to use property as wishes. Owner has the right to regulate anyone’s else use of property. Owner has the right to transfer the rights to property on whatever terms he wishes. Owner is responsible for making sure that his use of property does not damage others. So we can say Ownership is a combination of rights and responsibilities with respect to a specific property.
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5 Shareholders: Ownership (Cont’d) Historically, ownership is one of the major issue in all eras in the world. Dispute over property, ownership- started right from the very beginning……..Again human nature……. The modern western concept also follow it; as it emphasize on the ownership and believes that ownership can enhance the competitiveness of the companies, businesses…….. Islamic point of view…….. BS!!! Class!!!
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6 Shareholders: Ownership (Cont’d) Regarding the early concepts of corporations, as already discussed in the previous week lectures…… Initially corporations were formed by municipalities, universities etc. Later on, East India Company and Dutch companies. Later on the modern companies– multiple owners with different amount of shares to own it.
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7 The Role of Institutional Investors in CG What is Institutional Investor (II)? BoD are not the only ppl with responsibility for ensuring the effective CG. Shareholder, especially institutional investors have an important role to play. Different type of main II found usually in all countries are: Pension funds Life insurance companies Financial institutions and mutual funds etc
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8 Definition Institutional Investors are: “Organizations which raise funds from individuals and corporation and invest, as principle in the stock markets, using professional management and operating within the constraints provided by their own articles and trust deeds and tax and legal considerations”.
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