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This deals with:-

1. Introduction to Corporate Governance
Committees
2. Indian Committees
3. Foreign Committees

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 1. Introduction to Corporate
Governance Committees (CGCs)
Codes: Codes are a set of written rules, which are
accepted as general principles which state how people in
a particular organization or a country should behave.
Regulations: A regulation is an official rule that lay
down how things should be done.
CGCs have developed several CG codes and regulations
which are intended to control, guide or manage the
behavior or conduct of individual¶s working in
corporates/organizations.

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Important Reports on CG published by CG Committees:
A. Indian Committees:
1. Kumara Mangalam Birla Committee
2. Ganguly Committee
3. Naresh Chandra Committee
4. CII Committee
B. Foreign Committees:
1. OECD Committee
2. Cadbury Committee
C. Companies Act (Legal Framework for CG)

 1. Kumara Mangalam Birla Committee
Report (KMBCR)
KMB Committee was instituted by SEBI in 1999 to suggest
measures to promote and raise the standards of CG in
India.
Objectives:
1. To suggest amendments to listing agreements by cos.
with SEs and other measures and improving CG in listed
cos. regarding disclosures and responsibilities of
independent/outside directors.
2. Draft a code of best practices.
3. To suggest safeguards within cos. to deal with insider
information and insider trading.
 
 Recommendations of KMBC Report

KMBC identified the shareholders, Board & Mgmt.

as the constituents that have a key role to play in
CG and tried to identify their roles &
responsibilities in ensuring effective CG. Its
important recommendations are as follows:-
1. Board should have an optimum combination of
both Executive and Non-Executive Directors and
at least 50% of Board should comprise Non-EDs
and one-third of Board should comprise of
independent directors where Chairman is non-
executive and at least half of the Board should be
independent in case of Executive Chairman.
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Recommendations of KMBC Report
(Contd.)
2. A qualified & independent Audit Committee should be
appointed to enhance financial disclosures and
transparency.
3. A Remuneration Committee for deciding remuneration
and compensation package including pension rights to
EDs.
4. A Board Committee to look into shareholder issues, share
transfers & redressal of complaints.
5. CG section of Annual Report (AR) to deal with
remuneration paid to directors and on level of compliance
by the co..
6. Board Meetings should be held at least 4 times in a year
with a maximum time gap of 4 months between 2 meetings.
A
 Recommendations of KMBC Report
(Contd.)
7. All co. related information like qly results, etc. may be
put on co¶s website.
8. No director should be a member in more than 10
committees or act as Chairman of more than 5
committees across all cos. in which he is a director.
9. Disclosures to be made to the Board by the
management relating to all material, financial &
commercial transactions, where they have personal
interest.
10. Half-yearly declaration of financial performance
should be sent to each household of shareholders.
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 Recommendations of KMBC Report
(Contd.)

11. FIs can have nominees on the boards of borrower cos., to

protect their interests as creditors. The Nominee Directors
should take an active interest in the activities of the Board
and assume equal responsibilities, as any other director on
the Board.
12.A separate section on compliance with mandatory
recommendations should form part of the report and
details of non-compliance should be highlighted.
13. A certificate from the auditors on compliance should form
part of the AR and copies of ARs should be sent to the SEs.

·
 Cadbury Committee Report (CCR)
Under the Chairmanship of Adrian Cadbury (May 1991),
a committee was set up by Financial Reporting Council,
London Stock Exchange to look into the financial aspects
of Corporate Governance. It submitted its report on May
27, 1992, whose recommendations are as follows:-
1. There should be separation of roles of Chairman and CE.
2. Non-executive directors should act independently while
giving judgments on issues of strategy, performance,
allocation f resources and designing codes of conduct.
3. Majority of directors should be independent non-
executive directors and should not have any financial
interests in the company.
|
 Cadbury Committee Report (contd.)
4. The director¶s term should not exceed 3 years, which can
be extended with shareholders¶ approval.
5. There should be full transparency relating to directors
emoluments. There should be a judicious mix of salary and
performance related pay.
6. A Remuneration Committee made of fully or largely of
non-executive directors, should decide on the pay of the
executive directors.
7. The interim company report should give the balance sheet
information and be reviewed by the auditor.
8. There should be a professional and objective relationship
between the board and executives.
||
 Cadbury Committee Report (contd.)

10. Information regarding the audit fee should be

made public and there should be regular rotation
of auditors.

The recommendations of CCR were widely accepted

by the corporates in UK and they became a
reference point for many other committees, which
were set up by various governments all over the
world.

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OECD Report Recommendations (ORR)

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