KUMAR

MANAGALAM BIRLA
COMMITTEE ,1999
GROUP MEMBERS

GAURAV ALMAL
MRIDULA KHANNA
NITIN BANSAL
PRAVEEN KUMAR
RAJ KUMAR
SAIF AHMAD
KUMAR MANGALAM BIRLA
COMMITTEE,1999

Second major initiative taken by SEBI on 7th May’1999.

 Appointment of committee under chairmanship of

Mr. Kumar Mangalam Birla.

The Committee made 25 recommendations, 19 of them

were `mandatory‘.
WHY WAS THE COMMITTEE FORMED?
Primary objective was to view corporate
governance from perspective of investors
& shareholders.

To promote and raise the standards of

corporate governance.

To improve corporate governance

standards in listed companies in areas
such as -
 Disclosure of material information(financial & non-
financial)
 Responsibilities of independent & non-
independent directors
 To draft a code of corporate best practice
Names of the Members of the committee

Shri Kumar Mangalam Birla, Chairman, Aditya Birla group

Chairman of the Committee

1. Shri Rohit Bhagat, Country Head, Boston Consulting Group
2. Dr. J Bhagwati, Jt. Secretary, Ministry of Finance.
3. Shri Samir Biswas, Regional Director, Western Region, Department of
Company Affairs
Government of India
4. Shri S.P. Chhajed, President of Institute of Chartered Accountants of
India
5. Shri Virender Ganda, Ex-President of Institute of Company Secretaries
of India
6. Dr. Sumantra Ghoshal, Professor of Strategic Management, London
Business School
7. Shri Vijay Kalantri, President, All India Association of Industries
8. Shri Pratip Kar, Executive Director, SEBI — Member Secretary
9.Shri Y. H. Malegam, Managing Partner, S.B. Billimoria & Co
 Contd…..
10.Shri N. R. Narayana Murthy, Chairman and Managing
Director, Infosys Technologies Ltd.
11.Shri A K Narayanan, President of Tamil Nadu Investor
Association
12.Shri Kamal Parekh, Ex-President, Calcutta Stock Exchange
13.Dr. R. H. Patil, Managing Director, National Stock
Exchange Ltd.
14.Shri Anand Rathi, President of the Stock Exchange,
Mumbai
15.Ms D.N. Raval, Executive Director, SEBI
16.Shri Rajesh Shah, Former President of Confederation of
Indian Industries.
17.Shri L K Singhvi, Sr. Executive Director, SEBI
18.Shri S. S. Sodhi, Executive Director, Delhi Stock Exchange
RECOMMENDATIONS OF KUMAR
MANGALAM BIRLA COMMITTEE
Mandatory recommendations

 Aplies to listed companies of paid up capital of Rs.

3 crores .
 Composition of Board of Directors - optimum
combination of Executive & Non- Executive
directors(at least 50%).
 Audit Committee- With 3 independent directors,
with 1 having financial and accounting knowledge.
 Remuneration committee – Disclosure in annual
report relating to all elements of remuneration
package of directors like salary, bonus, ESOPs,
pension, benefits.
MANDATORY
RECOMMENDATIONS (contd…)
Participation of Director- shall not be a member of more
than 10 committees & shall not act as chairman of more
than 5 committees across all the companies.

Disclosure- Management discussion & analysis report

covering industry structure, opportunities, threats,
internal control system.

Information sharing with shareholders.

Board procedures- At least 4 meetings in a year, to

review operational plans, capital budgets & quarterly
results.
 NON - MANDATORY
RECOMMENDATIONS
Role Of Chairman - effective participation of all members

Remuneration Committee Of Board – credibility &

transparency

Ballot system -Shareholders' Right For Receiving Half

Yearly Financial Performance Postal Ballot Covering Critical
Matters Like Alteration In Memorandum Etc

Sale -Of Whole Or Substantial Part Of The Undertaking

Corporate Restructuring
Further Issue Of Capital
Venturing Into New Businesses
 COMPARISON OF CII & KMBC
RECOMMENDATIONS
CII Code Birla Committee
recommendations (1997) recommendations (2000)
a) For a listed company with turnover a)For a company with an executive
exceeding Rs.100 crores, if the Chairman, at least half of the board
Chairman is also the MD, at least half of should be independent directors¨, else
the board should be Independent at least one-third.
directors, else at least 30% .
b) Maximum of 10 directorships and 5
b) No single person should hold chairmanships per person.
directorships in more than 10 listed
companies. c) Audit Committee: A board must have
an qualified and independent audit
c) Non-executive directors should be committee, of minimum 3 members, all
competent and active and have clearly non-executive, with at least one having
defined responsibilities like in the Audit financial and accounting
Committee. Knowledge.
 (contd….)
CII KMBC

d) Consolidation of group accounts d) Companies should provide

should be optional and subject to FI’s consolidated accounts for subsidiaries
and IT department’s assessment norms. where they have
If a company consolidates, no need to majority shareholding.
annex subsidiary accounts but the
definition of “group” should include
parent and subsidiaries.

e)Remuneration-Committee:The
remuneration committee should decide
remuneration packages for executive
directors. It should have at least 3
directors, all no executive and be
chaired by an independent director.
 CONCLUDING REMARKS
 By and large, Indian listed companies have been
legally mandated to follow fairly strict standards of
corporate governance and disclosure

 Indian corporate sector regulators and

companies have been quick to incorporate some of
the best international corporate governance and
disclosure practices

 The need of the day is more training… of

directors, audit committee members and senior
executives of companies

The challenge is to design and sustain a system

that imbibes the spirit of corporate governance…
and not merely the letter of the law
 BIBLIOGRAPHY

http://www.nfcgindia.org/krbirla1999.htm
www.business.gov.in
http://www.sebi.gov.in/commreport/corpgov.jsp 27/

Handbook on International Corporate Governance - Chris

A. Mallin.
Article on “Corporate governance vs. Corporate crime”-
S. N. Mahapatra W & Sanjay Pandey
Q
&A