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Corporates, capital or capitalist owned?

Corporates, capital or capitalist owned?. "Management is the trustee of the shareholders' capital and not the owner.". THIS is one of the six `principles' that Infosys Technologies swears by in its "corporate governance philosophy".

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Corporates, capital or capitalist owned?

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  1. Corporates, capital or capitalist owned?

  2. "Management is the trustee of the shareholders' capital and not the owner."

  3. THIS is one of the six `principles' that Infosys Technologies swears by in its "corporate governance philosophy".

  4. Dhirubhai Ambani, Founder Chairman of Reliance group is reported to have held the view that a modern enterprise "is not about ownership, it is about trusteeship. It is not about amassing personal fortune, but about enlarging the collective wealth of millions of shareholders".

  5. Underlying these statements is a belief that in the Corporate India of today, ownership is not — or rather should not be — a fundamental concern for running a company.

  6. A company's promoter must subsume his role as `owner' to that of being a `manager' or `trustee' of the capital contributed by all shareholders (of which he may or may not be the dominant one).

  7. In other words, the individual capitalist is not as important as the company in which he has invested capital along with many other shareholders.

  8. The promoter may, over the years, even dilute his stake to the extent that there would be other categories of shareholders who end up owning the company more than he does.

  9. Yet, he may still remain a `more-than-equal' shareholder, simply by virtue of being able to manage the company's fortunes better than anyone and, more important, being perceived so by the majority of shareholders. In case they feel otherwise, the promoter ceases to even be manager and is reduced to an ordinary shareholder.

  10. Suppose most companies in the country were to one day adhere to this principle, capitalism would be seen to have truly arrived, wherein `capital' occupies precedence over the `capitalist'.

  11. Under the circumstances, maximising return on capital or shareholders' wealth becomes an objective function of the company, transcending promoter family pulls and pressures.

  12. Thank you

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