Professional Documents
Culture Documents
Compiled By:
Keval Kothari (PG-10-85)
Ankit Lodhia (PG-10-86)
Yogesh Punjabi (PG-10-100)
Pooja Shah (PG-10-108)
Introduction
On May 7th, 1999, The Securities and Exchange Board of
India (SEBI) had set up a committee under Kumar
Mangalam Birla, member SEBI Board, to promote
and raise the standards of good corporate governance.
The committee had identified the Shareholders,
the Board of Directors and the Management as the
three key constituents of corporate governance and
attempted to identify in respect of each of these
constituents, their roles and responsibilities as also
their rights in the context of good corporate
governance.
Introduction
kTkehep Rinegp oinr tv hieawd bperiemn aprielyp
athre din btye rtehset sc ofm am pitatretei,cular class of
stakeholders, namely, the shareholders, who
together with the investors form the principal constituency
of SEBI while not ignoring the needs of other
stakeholders.
Introduction
The concept of Corporate Governance came into vogue
first in the U.S.A. in 70s, followed by the U.K. in 90s.
RECOMMENDATIONS
Mandatory Recommendations
1. Implementation in phases as per schedule:
By all companies getting listed for the first time.
Within financial year 2000-2001, not later than 31st March 2001,
for entities in group A of BSE.
Walli tchoinm fpinaanniecsi alils yteda,r w2i0t0h1 p-a2i0d0 u2p , cnaopt
iltatle or ft hRasn. 1301 sCt rMoraersc.h, 2002, for
Within financial year 2002-2003 , not later than 31st March, 2003,
for all companies listed, with paid up capital of Rs. 3 Crores.
2. Non- Executive directors should form 50% of the BoD, with some
independent directors.
The number of independent directors would depend on the nature of the
chairman of the board.
In case a company has a non-executive chairman, at least one-third of
board should comprise of independent directors and in case a
company has an executive chairman, at least half of board should be
independent
Mandatory Recommendations
3. Nominee directors- on selective basis:
Institutions should appoint nominees on the boards of
companies only on a selective basis where such
appointment is pursuant to a right under loan agreements
opr owtehcetr teh seu icnhte arpepsto oinf tmhe nint sisti
tcuotniosnid. ered necessary to
13. Board should clearly define the role of CEO and key managers:
In the view of the Committee, the over-riding aim of management
is to maximize shareholder value without being detrimental to
the interests of other stakeholders.
The management however, is subservient to the board of directors
and must operate within the boundaries and the policy
framework laid down by the board.
The board is responsible for ensuring that the principles
of corporate governance are adhered to and enforced, the
real onus of implementation lies with the management.
It is responsible for translating into action, the policies and
strategies of the board and implementing its directives to achieve
corporate objectives of the company framed by the board .
Mandatory Recommendations
14. Board and Management must be accountable to the
shareholders:
As a part of the disclosure related to Management, the Committee
recommends that as part of the directors’ report or as an addition there to, a
Management Discussion and Analysis report should form part of the annual
report to the shareholders. This Management Discussion & Analysis
should include discussion on the following matters within the limits set by the
company’s competitive position:
Industry structure and developments.
· Opportunities and Threats
· Segment-wise or product-wise performance.
·Outlook.
·Risks and concerns
· Internal control systems and their adequacy.
· Discussion on financial performance with respect to operational performance.
· Material developments in Human Resources /Industrial Relations front, including
number of people employed.
Mandatory Recommendations
15. Shareholders right to participate and informed on
fundamental corporate changes. Quarterly results to be put
up on company’s website. Postal ballot to be introduced.
In this context, for shareholders who are unable to attend the meetings,
there should be a requirement which will enable them to vote by
postal ballot for key decisions.
RECOMMENDATIONS
power of share
the registrar andtransfer to an officer,
share transfer agents.or a committee or to
18-A separate section on C.G. in the annual reports of the companies with
a detailed compliance report on C.G.:
Non-compliance of any mandatory recommendation with reasons
thereof and the extent to which the non-mandatory recommendations
at company’s expense:
Given the importance of Chairman’s role, the Committee
recommends that nonexecutive Chairman should be entitled to
maintain a Chairman’s office at the company’s expense and also
allowed reimbursement of expenses incurred in performance of his
duties.
This will enable him to discharge the responsibilities effectively.
3-Remuneration committee of the Board should consist of three
directors :
4-H a lf - y e a r l y d e cl a r a ti o n of f in a
sh a r e h o l d e r s : T h e C o m m it te e
n c i a l p e rf o r m a n c e to b e s e n t
r e c o m m e n d s t h a t t h e h a l f- y e a
t o declaration of financial performance including summary
r ly
of the
significant events in last six-months, should be sent to each
household of shareholders.
5-Institutional shareholders take active interest in the composition of
the Board and be vigilant:
The Committee deliberated on the quorum for the meeting and was
of the view that remuneration is mostly fixed annually or after
specified
periods.
It would not be necessary for the committee to meet very often.
The Committee was of the view that it should not be difficult to arrange
for a date to suit the convenience of all the members of the committee.
The Committee therefore recommends that all the members of the
remuneration committee should be present at the meeting.
THANK YOU !!!