Good Corporate Governance & The Role of The Directors

Good Corporate Governance & The role of the directors
PROJECT SUBMITTED BY:NAME: NEHA S. REDKAR ROLL NO: 846 PROJECT NAME: Good Corporate Governance & the Role of the Directors
CERTIFICATE
I, Nadirshaw K. Dhondy, Advocate Supreme Court, have examined the thesis of Ms. Neha S. Redkar who is enrolled in Mumbai Institute of Management & Research (MIMR) for the academic year 2009-2011 in Masters of Management Studies Programme, Her unique Roll no. is 846. This thesis is put in fulfillment of the university programme for the subject Legal Aspects & Practices. She has been rated to receive ________ marks of 40.
Dated: 9/11/2009
Day: Friday
(Signature)
ACKNOWLEDGEMENT
It had been a wonderful experience to do this project on Corporate Governance & for this I thank Prof. Mr. Nadirshaw K. Dhondy for giving permission to commence this project in the first instance and to do the necessary ground work required for this project. I also humbly thank the almighty for showering his blessings on me and helping me to meet my challenges and enabling me in presenting this project.
PROLOGUE
Corporate Governance as a systematic process by which companies are directed and controlled to enhance their wealth generating capacity. Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. The primary role of the Board of directors is that of trusteeship to protect and enhance shareholder value through strategic supervision its wholly owned subsidiaries and their wholly owned subsidiaries.
A Trustee they will ensure that the company has clear goals relating to shareholder value and its growth. From time to time, Organizations experienced corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders.
It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company. This project is an attempt to understand what is Corporate Governance is all about, what are the policies & rules related to Corporate governance, how it helps a Organization to develop, what the Principles in a right manner are, what are the trends of the firms performance and the different roles of the directors, how does it related to business organizations.
INDEX
Sr. No. 1 2 3 4 5 6 7 8 9 Meaning History Definition
PARTICULARS
PAGE NO. 01 01 03 04 05 06 07 08 18
Enlightened Corporate Governance Principles of Corporate Governance Corporate Governance & the Firms Performance Role of Board of Directors Corporate Governance Followed by Bharti Airtel Corporate Governance Followed by Indian Oil Corporation
6
11 12
Epilogue Bibliography
29 30
CORPORATE GOVERNANCE
Meaning: Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed. The principal players are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focus on the impact of a corporate governance system in economic efficiency, with a strong emphasis on shareholders welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world.
History: In the 19th century, state corporation law enhanced the rights of corporate boards to govern without unanimous consent of shareholders in exchange for statutory benefits like appraisal rights, to make corporate governance more efficient. Since that time, and because most large publicly traded corporations in the US are incorporated under corporate administration friendly Delaware law, and because the US's wealth has been increasingly securitized into various corporate entities and institutions, the rights of individual owners and shareholders have become increasingly derivative and dissipated. The concerns of shareholders over administration pay and stock losses periodically has led to more frequent calls for corporate governance reforms. In the 20th century in the immediate aftermath of the Wall Street Crash of 1929 legal scholars such as Adolf Augustus Berle, Edwin Dodd, and Gardiner C. Means pondered on the changing role of the modern corporation in society. Berle and Means' monograph "The Modern Corporation and Private Property" (1932, Macmillan) continues to have a profound influence on the conception of corporate governance in scholarly debates today.
From the Chicago school of economics, Ronald Coase's "Nature of the Firm" (1937) introduced the notion of transaction costs into the understanding of why firms are founded and how they continue to behave. Fifty years later, Eugene Fama and Michael Jensen's "The Separation of Ownership and Control" (1983, Journal of Law and Economics) firmly
established agency theory as a way of understanding corporate governance: the firm is seen as a series of contracts. Agency theory's dominance was highlighted in a 1989 article by Kathleen Eisenhardt (Academy of Management Review). US expansion after World War II through the emergence of multinational corporations saw the establishment of the managerial class. Accordingly, the following Harvard Business School management professors published influential monographs studying their prominence: Myles Mace (entrepreneurship), Alfred D. Chandler, Jr. (business history), Jay Lorsch (organizational behavior) and Elizabeth MacIver (organizational behavior). According to Lorsch and MacIver "many large corporations have dominant control over business affairs without sufficient accountability or monitoring by their board of directors." In the first half of the 1990s, the issue of corporate governance in the U.S. received considerable press attention due to the wave of CEO dismissals (e.g.: IBM, Kodak, Honeywell) by their boards. CALPERS led a wave of institutional shareholder activism (something only very rarely seen before), as a way of ensuring that corporate value would not be destroyed by the now
traditionally cozy relationships between the CEO and the board of directors (e.g., by the unrestrained issuance of stock options, not infrequently back dated).
In 1997, the East Asian Financial Crisis saw the economies of Thailand, Indonesia, South Korea, Malaysia and The Philippines severely affected by the exit of foreign capital after property assets collapsed. The lack of corporate governance mechanisms in these countries highlighted the weaknesses of the institutions in their economies. In the early 2000s, the massive bankruptcies (and criminal malfeasance) of Enron and Worldcom, as well as lesser corporate debacles, such as Adelphia Communications, AOL, Arthur Andersen, Global Crossing, Tyco, and, more recently, Fannie Mae and Freddie Mac, led to increased shareholder and governmental interest in corporate governance. This culminated in the passage of the Sarbanes-Oxley Act of 2002. But, since then, the stock market has greatly recovered, and shareholder zeal has waned accordingly.
Definition: In A Board Culture of Corporate Governance business author Gabrielle O'Donovan defines corporate governance as 'an internal system encompassing policies, processes and people, which serves the needs of
10
shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity and integrity. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes'.
O'Donovan goes on to say that 'the perceived quality of a company's corporate governance can influence its share price as well as the cost of raising capital. Quality is determined by the financial markets, legislation and other external market forces plus the international organizational environment; how policies and processes are implemented and how people are led. External forces are, to a large extent, outside the circle of control of any board. The internal environment is quite a different matter, and offers companies the opportunity to differentiate from competitors through their board culture. To date, too much of corporate governance debate has centered on legislative policy, to deter fraudulent activities and transparency policy which misleads executives to treat the symptoms and not the cause.'[2] It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.
11
Report of SEBI committee (India) on Corporate Governance defines corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company. The definition is drawn from Gandhian principle of trusteeship and Directive Principle of constitution.
ENLIGHTENED CORPORATE GOVERNANCE Corporate governance, the unwieldy name given to the systems that guide the control and management of corporations, is a relatively recent term that came into being in the 1970s. Because corporate governance structures and processes specify the various roles and duties of corporate directors, senior executives, shareholders, and other stakeholders in the corporation, they play a large role in determining how responsible and accountable a corporations leaders will be in exercising their authority. When properly designed, governance processes guide companies toward useful objectives and help them monitor and measure their progress in achieving those objectives; when poorly designed, these processes permit companies to drift toward painful losses for shareholders and everyone else with a stake in the company. A companys corporate governancewhether good or badis established by its board of directors. Ideally, these directors will be energetic,
12
experienced people deeply concerned about the companys welfare. Because the boards most pivotal responsibilities are to hire and supervise the companys chief executive officer (CEO), these directors should not be company employees who work under the CEOs direction; instead, they should be independent of the companys management. When independent directors know how to work effectively with the companys senior management team, they are likely to produce a corporate climate that accelerates the growth of long-term shareholder value. Principles: Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization. Of importance is how directors and management develop a model of governance that aligns the values of the corporate participants and then evaluate this model periodically for its effectiveness. In particular, senior executives should conduct themselves honestly and ethically, especially concerning actual or apparent conflicts of interest, and disclosure in financial reports. Commonly accepted principles of corporate governance include:
Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and
13
accessible and encouraging shareholders to participate in general meetings.
Interests of other stakeholders: Organizations should recognize that they have legal and other obligations to all legitimate stakeholders.
Role and responsibilities of the board: The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors. The key roles of chairperson and CEO should not be held by the same person.
Integrity and ethical behavior: Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that systemic reliance on integrity and ethics is bound to eventual failure. Because of this, many organizations establish Compliance and Ethics Programs to minimize the risk that the firm steps outside of ethical and legal boundaries.
Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and
14
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.
Issues involving corporate governance principles include:

oversight of the preparation of the entity's financial statements internal controls and the independence of the entity's auditors review of the compensation arrangements for the chief executive officer and other senior executives the way in which individuals are nominated for positions on the board the resources made available to directors in carrying out their duties oversight and management of risk dividend policy
15
CORPORATE GOVERNANCE AND FIRM PERFORMANCE In its 'Global Investor Opinion Survey' of over 200 institutional investors first undertaken in 2000 and updated in 2002, McKinsey found that 80% of the respondents would pay a premium for well-governed companies. They defined a well-governed company as one that had mostly out-side directors, who had no management ties, undertook formal evaluation of its directors, and was responsive to investors' requests for information on governance issues. The size of the premium varied by market, from 11% for Canadian companies to around 40% for companies where the regulatory backdrop was least certain (those in Morocco, Egypt and Russia). Other studies have linked broad perceptions of the quality of companies to superior share price performance. In a study of five year cumulative returns of Fortune Magazine's survey of 'most admired firms', Antunovich et al found that those "most admired" had an average return of 125%, whilst the
16
'least admired' firms returned 80%. In a separate study Business Week enlisted institutional investors and 'experts' to assist in differentiating between boards with good and bad governance and found that companies with the highest rankings had the highest financial returns. On the other hand, research into the relationship between specific corporate governance controls and firm performance has been mixed and often weak. The following examples are illustrative. ROLE OF BOARD OF DIRECTORS Board Composition: Some researchers have found support for the relationship between frequency of meetings and profitability. Others have found a negative relationship between the proportion of external directors and firm performance, while others found no relationship between external board membership and performance. In a recent paper Bagahat and Black found that companies with more independent boards do not perform better than other companies. It is unlikely that board composition has a direct impact on firm performance. BHARTI AIRTEL Overview Highlights
Bharti Airtel Limited Q3FY08: Robust Growth Revenue for Quarter Crosses US$ 1.75bn.
17
Bharti Airtel Limited to announce results for the third quarter and nine months ended December 31, 2007, on January 30, 2008 (Wednesday) Bharti Airtel to Observe Silent period from December 31, 2007 Leading International Investors Pick up Stake Worth USD 1 Billion in Bharti Infratel Bharti Airtel to Observe Silent period from December 31, 2007 Bharti, Idea and Vodafone Essar announce formation of Independent Tower Company in India
Company Profile: Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 57,341,120 customers as on December 31, 2007, consisting of 55,162,944 GSM mobile and 2,178,176 broadband & telephone customers. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - mobile services, telemedia services (ATS) & enterprise services. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the ATS business group provides broadband & telephone services in 94 cities. The enterprise services group has two sub-units - carriers (long distance services) and services to corporates. All these services are provided under the Airtel brand. Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE).
18
Investor Relations: Creating value for our customers, employees, investors, partners, vendors and the society at large lies at the root of our fundamental business strategy. Our core principles of trust and transparency have come a long way in helping us develop and nurture long-term relationships with our key stakeholders. Our performance exudes from our belief in and commitment to the telecom sector; and translates into creating innovative exciting opportunities for one and all. Corporate Governance: Bharti Airtel Limited firmly believes in the principles of Corporate Governance and is committed to conduct its business in a manner, which will ensure sustainable, capital-efficient and long-term growth thereby maximising value for its shareholders, customers, employees and society at large. Companys policies are in line with Corporate Governance guidelines prescribed under Listing Agreement/s with Stock Exchanges and the Company ensures that various disclosures requirements are complied in letter and spirit for effective Corporate Governance. During the financial year 2003-04, your Company was assigned highest Governance and Value Creation (GVC) rating viz. Level 1 rating by CRISIL, which indicates that the companys capability with respect to creating wealth for all its stakeholders is the highest, while adopting sound Corporate Governance practices. This rating was re-affirmed by CRISIL on April 20, 2006.
Board of Directors
19

Audit Committee Human Resource (HR)/ Remuneration Committee ESOP Compensation Committee Investors Grievance Committee Memorandum of Association Article of Association
Board Composition: Some researchers have found support for the relationship between frequency of meetings and profitability. Others have found a negative relationship between the proportion of external directors and firm performance, while others found no relationship between external board membership and performance. In a recent paper Bagahat and Black found that companies with more independent boards do not perform better than other companies. It is unlikely that board composition has a direct impact on firm performance. ROLE OF Board of Directors: The board of directors of the Company has an optimum mix of executive and non-executive directors, which consists of two executive and twelve non-executive Directors on directors. the The Chairman and Managing Director, Mr. is 50% of the total board strength. Sunil Bharti Mittal is an Executive Director and the number of Independent Board The independence of a director is determined on the basis that such director does not have any material pecuniary relationship with the Company, its promoters or its management, which may affect the independence of the judgment of a Director.
20
The board members possess requisite skills, experience
and
expertise
required to take decisions, which are in the best interest of the Company.
Audit Committee: Composition of Audit Committee The Audit Committee of Bharti Airtel Limited comprises of following six members, two-third of which are independent directors. S. No. 1. 2. 3. 4. 5. 6. Member Director N.Kumar (Chairman) Rakesh Bharti Mittal Francis Heng Arun Bharat Ram Ajay Lal Pulak Chandan Prasad Category Independent Director Non-Executive Director Non-Executive Director Independent Director Independent Director Independent Director
Secretary:
The Company Secretary or his/her nominee act as the Secretary of the Committee.
Meetings:
The Committee shall meet at least four times a year. The time gap between any two meetings shall be less than 4 months.
Annual General Meeting:
21
The Committee Chairman shall attend the Annual General Meeting.
Key Functions: The key functions of the Audit Committee include the following:
Oversight of the Companys financial reporting process and the disclosure of its financial information, to ensure that the financial statements are true and accurate and provide sufficient information. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of their audit fees. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:
Reviewing, with the management, the quarterly financial statements before submission to the Board for approval. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems. Reviewing the adequacy of internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, availability and deployment of resources to complete their responsibilities and the performance of the out-sourced audit activity.
22
Discussion with internal auditors with respect to the coverage and frequency of internal audits as per the annual audit plan, nature of significant findings and follow up thereof. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. Obtaining an update on the Risks Management Framework and the manner in which risks are being addressed. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. Review the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors, if any. To review the functioning of the Whistle Blower mechanism and the nature of complaints received by the Ombudsman. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The un-audited/ audited quarterly financial results of the Company are also specifically reviewed by the Audit Committee before these are submitted to the Board for approval. Minutes of each Audit Committee meeting are placed before the Board for noting.
23
The Audit Committee is empowered, pursuant to its terms of reference, to:
Investigate any activity within its terms of reference and to seek any information it requires from any employee. Obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise, when considered necessary.
Bharti Airtel Limited has instituted internal processes and systems to insure that the Audit Committee has access to all the material information, and reviews on a regular basis the following:
Management discussion and analysis of financial condition and results of operations. Statement of significant related party transactions (as defined by the audit committee), submitted by management. Management Certificates on Internal Controls and Compliance with laws & regulations, including any exceptions to these. Management letters / letters of internal control weaknesses issued by the statutory auditors. Internal audit reports relating to internal control weaknesses. The appointment, removal and terms of remuneration of the Chief Internal Auditor. The financial statements, in particular the investments, if any made by the unlisted subsidiary companies.
24
The Audit Committee is also presented with the following information on related party transactions (whenever applicable):
A statement in summary form of transactions with related parties in the ordinary course of business. Details of material transactions with related parties, which are not in the normal course of business. Details of material transactions with related parties or others, which are not on an arms length basis along with managements justification for the same.
Miscellaneous: The Committee may invite other Directors/ Officers of the Company to attend the meetings of the Committee as Invitees from time to time, as and when required. Minutes of the Audit Committee are placed before the Board in its subsequent meeting.
25
Human Resource (HR)/ Remuneration Committee

Composition: In compliance with the non- mandatory requirements of Clause 49 of the Listing Agreement, Bharti Airtel has constituted a Remuneration Committee (which is known as HR Committee). The HR Committee comprises of following five non-executive directors, out of which three members including the chairman of the committee are independent directors. S. No. 1. 2. 3. 4. 5. Member Director Mr. Donald Cameron Mr. Kurt Hellstrom Mr. Paul O Sullivan Mr. Rajan Bharti Mittal Mr. Bashir Currimjee Category Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director Non-Executive Director Independent Non-Executive Director
Secretary:
Key Functions: The key function of the HR Committee includes the followings:
26

Attraction and Retention strategies for employees. Employees Development Strategies. Compensation (including salaries and salary adjustments, incentives/benefits bonuses, stock options) and performance targets for the Chairman and Managing Director (CMD) and Joint Managing Directors (JMDs) Executive Directors. All Human Resources related issue. Other key issues / matters as may be referred by the Board or as may be necessary in view of Clause 49 of the Listing Agreement or any statutory provisions.
Miscellaneous: The Committee may invite other Directors/ Officers of the Company to attend the meetings of the HR Committee as Invitees from time to time, as and when required. Minutes of the HR Committee are placed before the Board in its subsequent meeting.
ESOP Compensation Committee

Composition of ESOP Compensation Committee:
27
The ESOP Compensation Committee of the Board is constituted in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Committee comprises of following 4 members of whom three are independent and all are nonexecutive.
S. No. Member Director Category 1. Mr. Rajan Bharti Mittal (Chairman) Non-Executive Director 2. Mr. Bashir Currimjee Non-Executive Director 3. Mr. Paul O' Sullivan Non-Executive Director 4. Mr. Donald Cameron Independent Director 5. Mr. Kurt Hellstrom Independent Director
Secretary:
Key Responsibilities: The key responsibilities of the ESOP Compensation Committee include the following:
To formulate ESOP plans and decide on future grants.
28
To formulate terms and conditions on followings under the present two Employee Stock Option Schemes of the Company:
1. the quantum of option to be granted under ESOP Scheme(s) per employee and in aggregate; 2. the conditions under which option vested in employees may lapse in case of termination of employment for misconduct; 3. the exercise period within which the employee should exercise the option and that option would lapse on failure to exercise the option within the exercise period; 4. the specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee; 5. the right of an employee to exercise all the options vested in him at one time or at various points of time within the exercise period; 6. the procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of rights issues, bonus issues and other corporate actions; 7. the grant, vest and exercise of option in case of employees who are on long leave; and 8. the procedure for cashless exercise of options. 9. Any other matter, which may be relevant for administration of ESOP Schemes from time to time.
To frame suitable policies and systems to ensure that there is no violation of Securities and Exchange Board of India (Insider Trading) Regulations, 1992 and Securities and Exchange Board of India
29
(Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 1995.
Other key issues as may be referred by the board.
Other Terms:
The Committee may invite other directors/ officers of the company to attend the meetings of the Committee as Invitees from time to time as and when required.
Minutes of the meeting of the committee are placed before the board of directors in the subsequent board meeting.
Investor Grievance Committee

Composition of Investor Grievance Committee: The Investor Grievance Committee of the Board is constituted in accordance with Clause 49 of the Listing Agreement. The Committee comprises of following three members of whom two members including the Chairman, are executive directors.
30
S. No. Member Director Category 1. Mr. Rakesh Bharti Mittal (Chairman) Non-executive Director 2. Mr. Rajan Bharti Mittal Non-executive Director 3. Mr. Akhil Gupta Executive Director
Secretary:
Key Responsibilities: The key Responsibilities of the Investor Grievence Committeee includes the following:
Redressal of shareholders and investor complaints e.g. transfer of shares, non receipt of balance sheet, non receipt of declared dividend etc.
31
Formulation of procedures in line with the statutory guidelines to ensure speedy disposal of various requests received from shareholders from time to time. Issue of duplicate share certificates in place of original certificate, which may be lost/ torn/ mutilated; To approve and effect transmission of shares arising as a result of death of the sole/ any one joint shareholder.
Meetings:
The meetings of the Committee are genrally held on a monthly basis, to review and ensure that all investor grievances are redressed within a period of 7-10 days from the date of receipt of complaint. These, however, do not include complaints/requests, which are constrained by legal impediments/procedural issues.
Other Terms:
The Committee may invite other Directors/ Officers of the Company to attend the meetings of the Compensation Committee as Invitees from time to time as and when required. Minutes of the Investor Grievance Committee are placed before the Board in its subsequent meeting.
32
INDIAN OIL CORPORATION

About Us: IndianOil, September 17, 2007 Indian Oil Corporation Ltd. is currently India's largest company by sales with a turnover of Rs. 220,779 crore (US $51 billion), the highest-ever for an Indian company, and profits of Rs. 7499 crore (US $1.73 billion) for fiscal 2006. IndianOil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing, having moved up 18 places to the 135th position this year based on fiscal 2006
33
performance. It is also the 20th largest petroleum company in the world. IndianOil's vision is driven by a group of dynamic leaders who have made it a name to reckon with. In this section you can peruse through the profile and spread of IndianOil across the country & abroad. You can also know about IndianOil's current financial performance, special initiatives and causes along with the prestigious recognitions & awards that has come its way for exceptional performances. Products: IndianOil is not only the largest commercial enterprise in the country it is the flagship corporate of the Indian Nation. Besides having a dominant market share, IndianOil is widely recognized as Indias dominant energy brand and customers perceive IndianOil as a reliable symbol for high quality products and services. Benchmarking Quality, Quantity and Service to world-class standards is a philosophy that IndianOil adheres to so as to ensure that customers get a truly global experience in India. Our continued emphasis is on providing fuel management solutions to customers who can then benefit from our expertise in efficient sourcing and least cost supplies keeping in mind their usage patterns and inventory management. IndianOil is a heritage and iconic brand at one level and a contemporary, global brand at another level. While quality, reliability and service remains the core benefits to our customers, our stringent checks are built
34
into operating systems, at every level ensuring the trust of over a billion Indians over the last four decades. Our Retail Brand template of XtraCare(Urban), Swagat(Highway) and Kisan Seva Kendras(Rural) are widely recognized as pioneering brands in the petroleum retail segment. IndianOils leadership extends to its energy brands - Indane LPG, SERVO Lubricants, Autogas LPG, XtraPremium Branded Petrol, XtraMile Branded Diesel, XtraPower Fleet Card, IndianOil Aviation and XtraRewards cash customer loyalty programme.
Services: IndianOil has wide-ranging expertise in setting up and operating Greenfield refineries and brownfield expansions. It has pioneered pipeline transportation knowhow in India, and has over four decades of experience in putting up marketing infrastructure across the sub-continent, to reach petroleum products to millions of people everyday. Backed by cutting edge R&D that offers innovative products, technologies and services covering the entire gamut of downstream operations. IndianOil has been lending its expertise for nearly two decades to various countries in several areas of refining, marketing, transportation, training and R&D. These include Sri Lanka, Kuwait, Bahrain, Iraq, Abu Dhabi, Tanzania, Ethiopia, Algeria, Nigeria, Nepal, Bhutan, Maldives, Malaysia and Zambia.
35
IndianOil's capabilities in the downstream sector of operations in the oil sector include; Technical and Consultancy Services, Operation & Maintenance, Techno-Economic feasibility/special studies, Turnaround Maintenance planning, monitoring & execution, Inspection, Quality Control: benchmarking, Shipping and Commercial, Logistics, Research & Development, Safety and Industrial hygiene, Quality Auditing/ Management, Materials Management, Training. In all this and more, IndianOil looks forward to sharing its expertise worldwide. Investor Centre: IndianOil, January 11, 2008 The shares of the company are listed on Bombay Stock Exchange Ltd. and National Stock Exchange Ltd. The shares of the company are compulsorily traded in the dematerialized form. The company has an agreement with NSDL and CDSL to enable the shareholders to deal in the shares of the company in dematerialized form. The Stock Code of the Company at BSE is 530965 and at NSE is IOC. The ISIN No. for the purpose of dematerialisation is INE 242A01010. The company hosts various information like quarterly shareholding pattern, presentation to bankers and financial analysts, statutory notices etc. for the benefit of its shareholders on its website. The company has created an e-mail id is investors@indianoil.co.in to enable shareholders to communicate with the company. The Registrar & Transfer Agent of the company is, M/s Karvy Computershare Pvt. Ltd. Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad 500 081. The email id is mailmanager@karvy.com
36
Companys Philosophy on Corporate Governance: IndianOil believes that good Corporate Governance practices would ensure efficient conduct of the affairs of the Company and also help in maximising value for all its stakeholders. The Company endeavours to uphold the principles and practices of Corporate Governance to ensure transparency, integrity and accountability in its functioning, which are vital to achieve its Vision of becoming a major diversified, transnational, integrated energy company. IndianOil complies with the requirements of the guidelines on Corporate Governance as stipulated in Clause-49 of the Listing Agreement except the provision relating to the composition of the Board of Directors with respect to number of Independent Directors for which the Company has requested the Government of India to induct the requisite number of Independent Directors. With the adoption of (a) Code of conduct for Directors and senior management personnel, (b) Code of conduct for prevention of insider trading and (c) Policy on risk assessment and minimising procedures, the Company has further enhanced its Governance structure. Board Of Directors:
37
The Board of IndianOil has set certain strategic goals in order to achieve its Vision and Mission statements. The Board defines the Companys policy and oversees its implementation in attaining these goals. (a) Composition of the Board of Directors The Board of Indian Oil consists of an optimum complement of executive and non-executive Directors. Part-time non-executive Independent Directors are persons with a proven record in diverse areas like energy policy, academics, finance, marketing, Government and public sector, etc. As on 31st March 2007, the Board comprised of 14 Directors. These include Chairman and six whole-time Functional Directors, five part-time nonexecutive Independent Directors, one part-time non-executive nominee Director from the Ministry of Petroleum & Natural Gas (MoP&NG), Government of India, and one part-time non-executive Director being a nominee of ONGC Ltd.
(b) Board Meetings The dates of the Board Meetings are fixed well in advance and intimated to the Board members so as to enable the Directors to plan accordingly. The agenda papers are circulated to the Directors well in advance before the meeting. (c) Code of Conduct:
38
The Code of Conduct for the Directors and senior management personnel of the Company has been laid down by the Board and has been circulated to all concerned and the same is also hosted on the website of the Company. Audit Committee: The Audit Committee has been constituted in line with the provisions of Clause 49 of the Listing Agreement and also meets the requirements of Section 292A of the Companies Act, 1956. The members of the Audit Committee have requisite financial and management expertise. The Audit Committee comprises of three part-time non-executive Independent Directors viz. Prof. S. K. Barua, Chairman of the committee, Shri V. K. Agarwal and Shri V. Ranganathan as members.
The terms of reference of Audit Committee cover all matters specified under Clause 49 of the Listing Agreement of the Stock Exchanges, which inter alia includes the following: - Overseeing the Companys financial reporting process and disclosure of financial information to ensure that the financial statements are correct, sufficient and credible; - Reviewing with the management the annual financial statements before submission to the Board;
39
- Reviewing with the management and statutory and internal auditors, the adequacy of internal control systems; - Discussing with internal auditors any significant findings and follow-up on such issues; - Discussion with statutory auditors before the audit commences on the nature and scope of audit, as well as having post-audit discussion to ascertain any area of concern; - Reviewing the Companys financial and risk management policies. The Audit Committee meetings are also attended by the Director (Finance) and the head of Internal Audit as special invitees. The representatives of the Statutory Auditors are invited to the meetings as and when required. The Company Secretary acts as the Secretary of the Audit Committee. The minutes of the meetings of the Audit Committee are circulated among members of the Audit Committee and the special invitees and are also submitted to the Board.
EPILOGUE
Good Corporate Governance practices would ensure efficient conduct of the affairs of the Company and also help in maximizing value for all its stakeholders & The Board of Directors plays a key role in the decision making process of the boards as they approve the overall strategy of the corporation and oversee the performance of management.
40
From this project I have understood is, since large corporations employ vast quantum of societal resources, we believe that the governance process should ensure that these companies are managed in a manner that meets stakeholders aspirations and societal expectations. The key elements of good Corporate Governance principles include honesty, trust and integrity, openness responsibility and accountability which help the organization to work smoothly and maintain peace and also the various forms and methods of good governance.
BIBLIOGRAPHY
Search Engines
www.google.com
www.yahoo.com
www.wikipedia.com
41
42

Good Corporate Governance & The Role of The Directors

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Good Corporate Governance & The Role of The Directors

Hochgeladen von

Copyright:

Verfügbare Formate

Good Corporate Governance & The role of the directors