Corporate Governance

Roll No.
12115B0041 12115B0043 12115B0044 12115B0045

Team Members
Prathamesh Vernekar Md. Muzaffar Shaikh Khusbu Chheda Ekta Uparkar

12115B0046 12115B0050
12115B0051 12115B0053 12115B0055 12115B0060

Chirag Gohil Subhan Dabir

Sheldon Fernandes Jay Patel Pritam Mundarkar Kiran Gawade

INTRODUCTION

Corporate governance refers to the system by which corporations are directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs.

PRINCIPLES OF CORPORATE GOVERNANCE

Rights and equitable treatment of shareholders Interests of other stakeholders

Role and responsibilities of the board

Integrity and ethical behavior Disclosure and transparency

OBJECTVES OF CORPORATE GOVERNANCE

A properly structured board capable of taking independent and objective decisions is in place at the helm of affairs. The board is balance as regards the representation of adequate number of nonexecutive and independent directors who will take care of their interests and well-being of all the stakeholders. The board adopts transparent procedures and practices and arrives at decisions on the strength of adequate information. The board has an effective machinery to subserve the concerns of stakeholders. The board keeps the shareholders informed of relevant developments impacting the company. The board effectively and regularly monitors the functioning of the management team;

Best Practices and Main Themes of Corporate Governance

Accountability Fairness Transparency

CORPORATE GOVERNANCE INITIATIVES IN INDIA

There have been several major corporate governance initiatives launched in India since the mid-1990s. The first was by the Confederation of Indian Industry (CII), Indias largest industry and business association, which came up with the first voluntary code of corporate governance in 1998. The second was by the SEBI, now enshrined as Clause 49 of the listing agreement. The third was the Naresh Chandra Committee, which submitted its report in 2002. The fourth was again by SEBI the Narayana Murthy Committee, which also submitted its report in 2002. Based on some of the recommendation of this committee, SEBI revised Clause 49 of the listing agreement in August 2003. Subsequently, SEBI withdrew the revised Clause 49 in December 2003, and currently, the original Clause 49 is in force.

CONFEDERATION OF INDIAN INDUSTRY (CII)

Recommendation 1 :-

There is no need to adopt the German system of two-tier boards to ensure desirable corporate governance.

Recommendation 2 :-

Any listed companies with a turnover of Rs.100 crores and above should have professionally competent, independent, non-executive directors

Recommendation 3 :-

No single person should hold directorships in more than 10 listed companies.

Recommendation 4 :-

For non-executive directors to play a material role in corporate decision making and maximising long term shareholder value

Recommendation 5 :Recommendation 6:-

To secure better effort from non-executive directors

Re-appointing members of the board

Recommendation 7:Recommendation 8:Recommendation 9:Recommendation 10:Recommendation 11:Recommendation 12:-

Key information

Under Additional Shareholders Information

For all companies with paid-up capital of Rs. 20 crores or more, the quality and quantity of disclosure that accompanies a GDR issue should be the norm for any domestic issue.

Recommendation 13:-

Government must allow far greater funding to the corporate sector against the security of shares and other paper.

Recommendation 14 :-

Companies that default on fixed deposits should not be permitted to

o

accept further deposits and make inter-corporate loans or investments until the default is made good; and
declare dividends until the default is made good. Recommendation 17 :-

KUMAR MANGALAM BIRLA COMMITTEE ON CORPORATE GOVERNANCE

1. 2. 3. 4. 5.

A brief statement on companys philosophy on code of governance. 2. Board of Directors : Audit Committee : Remuneration Committee Shareholders Committee :

6.
7. 8.

General Body meetings :

Disclosures : Means of communication :

CLAUSE 49 OF LISTING AGREEMENT

Equity Listing Agreement Mandatory &Non-mandatory Provisions. compliance

RECOMMENDATIONS OF THE NARESH CHANDRA COMMITTEE REPORT

Recommendation :

Auditors Company Relationship List Of Prohibition Non-Audit Services Compulsory Audit Partner Rotation Disclosure Of Contingent Liabilities Auditors Disclosure Of Qualification And Consequent Actions. Managements Certification In The Event Of Auditors Replacement. Auditors Annual Certification Of Independence Appointment Of Auditors

RECOMMENDATIONS OF THE NARESH CHANDRA COMMITTEE REPORT

CEO / CFO Certification Defining An Independent Director

Percentage Of Independent Directors

Minimum board size of listed companies Disclosure on duration of board meetings / Committee meetings

Tele-conferencing and video conferencing

Additional disclosure to directors Independent directors on Audit Committees of listed companies

Audit Committee charter

Remuneration of non-executive directors

RECOMMENDATIONS OF THE NARYANA MURTHY COMMITTEE ON CORPORATE GOVERNANCE

Audit Committee : Related Party Transactions : Proceeds from initial public offerings (IPO) : Risk management : Code of conduct : Nominee directors :

Non-executive director compensation :

Whistle blower policy :

Cadbury Committee Report (1992)

The report was mainly divided into three parts:

Reviewing the structure and responsibilities of Boards of Directors and recommending a Code of Best Practice : Considering the role of Auditors and addressing a number of recommendations to the Accountancy Profession

Dealing with the Rights and Responsibilities of Shareholders

GREENBURY COMMITTEE (1994)

Greenbury Committee Findings Greenbury Recommendations

WHISTLEBLOWING AND GOOD GOVERNANCE

Whistle Blowing Implementation of Whistle Blower Policy Development of Whistle Blower Policy

SARBANES-OXLEY ACT 2002

Companies Affected By Sarbanes-Oxley Requirement of Sarbanes-Oxley Act Sarbanes-Oxley Act In Practice Benefits to be gained from Sarbanes-Oxley compliance 1. Operations that are more streamlined

2. Cost efficiency is likely to have an impact upon the bottom line

CASE STUDY OF SATYAM COMPUTERS

Case Overview Governance Lessons from India's Satyam Board Composition Board Committees

CONCLUSION