Case Study on

INFOSYS TECHNOLOGIES: THE BEST AMONG INDIAN CORPORATIONS

Q1. Give your comments on the management pattern corporate

governance of Infosys.
Infosys, an Indian software company, now internationally benchmarked
standard company of corporate governance. The company has rated highly by
several rating company i.e. CLSA which has given it high CG star.
Corporate governance: A system of checks and balances between the board,
management and investors to produce an efficiently functioning corporation,
ideally geared to produce long-term value.
Corporate governance philosophy of Infosys:

Corporate governance standards should go beyond the law and satisfy the
spirit of the law, not just the letter of the law
When in doubt, disclose. Ensure transparency and maintain a high level of
disclosure
Clearly distinguish between personal conveniences and corporate
resources
Communicate externally, and truthfully, about how the Company is run
internally
Comply with the laws of all countries in which we operate
Have a simple and transparent corporate structure driven solely by
business needs
The Management is the trustee of the shareholders' capital and not the
owner.

Practices of Corporate Governance

Infosys started implementing best corporate governance practices after the
recommendation of the Cadbury Committee and the Confederation of Indian
Industry Code. Infosys adopted most of the recommendation by the CII and the
Kumar Managum Birla Committee.
If best corporate governance practices are to be implemented in an
organization, it has to be done in a manner so as ensure
I.
II.

An independent and proactive board,

Independent committees to decide executive compensation and for
nomination and audit purpose

III.

Independent audit system.

Infosys put all of this in practices and has seen to their yielding the fruitful
results for the overall welfare of all stakeholders.
Infosys make below unique practices in their organization

Infosys Technologies believe that the Board of Directors is at the core of

corporate governance practice and oversees how management serves
and protects the long term interest of all stakeholders.
Infosys has an active, well-informed and independent board, which is
necessary to ensure high standards of corporate governance in any
organization.
The majority of the, 8 out of 15 are independent members.
Infosys is committed to long-term shareholder value.
Infosys has audit, compensation, investor grievances, nominations, and
risk management committees which comprises only independent
directors.
Furnish in the annual reports about its compliance with the corporate
governance guidelines of six countries in their national languages.
The company complies with Euro shareholders corporate governance
guidelines, 2000.
The recommendations of The Conference Board Commission on public
trust and private enterprises in the US.
The company also adheres to the UN global compact programme.

The company has effective and efficient risk management system in one aspect
of corporate governance that helps the company achieve its goal of maximizing
shareholder wealth.

Q2. Give the critical evaluation on the ethical issues of Infosys. (If any)
Infosys Technologies has disclosed a Code of Ethics for its finance professionals
and a whistleblowers policy to encourage and protect employees, willing to
share information on frauds, but who choose to remain anonymous.
The Code of Business Conduct and Ethics helps the company ensure compliance
with legal requirements and the companys standard of business conduct. The
code deals with aspects of employees responsibilities to the company and its
stockholders.

The whistleblowers policy encourage employees to report questionable

accounting matters, any reporting of fraudulent financial information or any
conduct that results in a violation of law by Infosys, to the management even if
it is on an anonymous basis.
In terms of ethical behavior, Infosys has an unwavering commitment to best
global practices and has been driven by its vision to become a global player. It
was one of the first Indian public companies to adopt voluntarily the US GAAP.
In terms of ethical behavior, Infosys has an unwavering commitment to best
global practices. The culture of ethical behavior in the organization emanates
from the top and percolates down to the managerial and employee level. The
founder of the company only took salary and dividend from the company and
nothing else. Ethical steps are same for all of the company. The steps doing the
same including:

Making the decision to commit ethics

Recognition that they are the role models by definition, by action and by
values
Assuming responsibility for instilling ethical behavior
Articulating their values
Train the stuff
Encouraging open communication
Being consistent in their step

Narayan Murthy and other leaders at Infosys have taken this to heart and make
it a point to express the companys ideal at every opportunity.
Infosys follows the every rule of ethics. They started following code of ethics but
Phaneesh murthy case give them a good reason to strict on business ethics after
2003.