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• Initiatives are being taken to (i) account for ESOPs, (ii) further
increase disclosures, and (iii) put in place systems that can further
strengthen auditors’ independence.
Supervisory board/committee/team
Audit committee
Internal audit
Statutory audit
Disclosure of information
Managers
Workers
Shareholders or owners
Regulators
Customers
Suppliers
organization.)
Principles of corporate governance
• Rights and equitable treatment of share holders: Organizations should respect the rights
of shareholders and help shareholders to exercise those rights.
• Interests of other stakeholders: Organizations should recognize that they have legal,
contractual, social, and market driven obligations to non-shareholder stakeholders,
including employees, investors, creditors, suppliers, local communities, customers, and
policy makers.
• Role and responsibilities of the board: The board needs sufficient relevant skills and
understanding to review and challenge management performance. It also needs adequate
size and appropriate levels of independence and commitment
• Integrity and ethical behavior: Integrity should be a fundamental requirement in choosing
corporate officers and board members.
• Disclosure and transparency: Organizations should clarify and make publicly known the
roles and responsibilities of board and management to provide stakeholders with a level
of accountability. They should also implement procedures to independently verify and
safeguard the integrity of the company's financial reporting. Disclosure of material
matters concerning the organization should be timely and balanced to ensure that all
investors have access to clear, factual information.
Every listed company should be headed by an effective
board which should lead and control the company.
There should be board balance of executive & non
executive directors such that no individual can dominate
the board decision making.
The board should be supplied with timely information to
enable it to discharge its duties.
There should be formal and transparent procedure for
the appointment of new directors to the board.
All directors should be required to submit themselves for
re-election at regular intervals and at least every three
years.
Integrity of the management
Ongoing training
Succession planning
Overseeing strategic development & planning
Responsibility
Transparency
Fairness
Fundamental Pillars of Corporate
Governance
Accountability
Clarifying governance roles & responsibilities, and
supporting voluntary efforts to ensure the alignment of
managerial and shareholder interests and monitoring by
the board of directors capable of objectivity and sound
judgment.
Transparency
Requiring timely disclosure of adequate information
concerning corporate financial performance
Responsibility
Ensuring that corporations comply with relevant laws and
regulations that reflect the society’s values
Fairness
Ensuring the protection of shareholders’ rights and the
enforceability of contracts with service/resource providers
Investors are Willing to Pay More For a Company With
Good Board Governance Practices
83 81 89
• REMUNERATION COMMITTEE
• BOARD PROCEDURES – ATLEAST 4 MEETINGS OF THE
BOARD IN A YEAR WITH MAXIMUM GAP OF 4 MONTHS
BETWEEN 2 MEETINGS. TO REVIEW OPERATIONAL PLANS,
CAPITAL BUDGETS, QUARTERLY RESULTS, MINUTES OF
COMMITTEE’S MEETING.
• DIRECTOR SHALL NOT BE A MEMBER OF MORE THAN 10
COMMITTEE AND SHALL NOT ACT AS CHAIRMAN OF MORE
THAN 5 COMMITTEES ACROSS ALL COMPANIES
• MANAGEMENT DISCUSSION AND ANALYSIS REPORT
COVERING INDUSTRY STRUCTURE, OPPORTUNITIES,
THREATS, RISKS, OUTLOOK, INTERNAL CONTROL SYSTEM
• INFORMATION SHARING WITH SHAREHOLDERS
NON-MANDATORY RECOMMENDATIONS OF BIRLA
COMMITTEE
• ROLE OF CHAIRMAN
• REMUNERATION COMMITTEE OF BOARD
• 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
IMPLEMENTATION OF RECOMMENDATIONS OF BIRLA
COMMITTEE
• COMPOSITION OF BOARD –
IN CASE OF FULL TIME CHAIRMAN, 50% NON-EXECUTIVE DIRECTORS AND
50% EXECUTIVE DIRECTORS