Institute of Business Secretaries of India –

“Corporate Governance is the application of Best Management Practices, Compliance with Laws in the true letter and spirit and compliance with ethical standards for effective management and distribution of wealth and compliance with social responsibility for sustainable development for all stakeholders “.

Standard and Poor: “Corporate governance is the way a company is organized and managed to ensure that all financial stakeholders receive a fair share of the company’s profits and assets.”

Corporate Governance Objectives: –

Corporate Governance aims to create an organization that maximizes shareholder wealth. An organization is envisaged that emphasizes fulfilling social responsibilities towards stakeholders, in addition to obtaining benefits. The objectives of Corporate Governance are to ensure the following:

1. Duly constituted Board of Directors capable of making independent and objective decisions.

2. The Board of Directors is independent in terms of Independent and Non-Executive Directors.

3. The Board adopts transparent procedures and practices.

4. The Board has an effective machinery to address the concerns of Stakeholders.

5. Board to monitor the performance of the Management Team.

6. Duly constituted Board of Directors capable of making independent and objective decisions.

7. The Board of Directors is independent in terms of Independent and Non-Executive Directors.

8. The Board of Directors adopts transparent procedures and practices.

9. The board has an effective mechanism to address stakeholder concerns.

10. Board to monitor the performance of the Management Team.

11. The Board maintains effective control of the affairs of the Company.

Elements of good corporate governance: –

1. Function and powers of the Board.

2. Legislation

3. Management environment

4. Board skills

5. Appointments to the board

6. Board induction and training

7. Independence of the board

8. Board meetings

9. Board resources

10. Code of conduct

11. Establishment of strategies

12. Financial and operational reports

13. Supervision of the performance of the Board

14. Audit Committee

15. Risk management

Secretarial rules: –

The Institute of Business Secretaries of India has issued the following Standards to maintain uniformity of procedure regarding Board Meetings, General Meetings, Dividend Payment, Record Keeping and Records, Minutes Writing and Transfer and Transfer of Shares.

A brief detail of these rules is provided below:

SS1 – Board of Directors Meetings: –

The Secretarial Regulation -1 deals with the meetings of the Board of Directors. The various aspects of conducting Board meetings, the frequency of said meetings in a year, the Quorum required for the meeting, the powers of the President in said meetings and the record of the minutes of said meetings are discussed.

SS2 – General Meetings: –

Secretariat Regulation -2 deals with General Meetings. It explains the procedure for conducting the General Meetings, the frequency of the meetings in a year, the Quorum required for conducting the meeting, the powers of the President in said meetings, the record of the minutes of said meetings, the voting procedure, etc.

SS3 – Dividend: –

This Secretariat Rule refers to Dividends. It illustrates the calculation of the amount payable as a dividend, declaration of dividend, Treatment of unpaid dividends and Transfer of dividends to the Investor Education and Protection Fund (IEPF).

SS4 – Records and Records

This Clerk Standard lists the various records that must be maintained according to legal requirements. Requires the following records to be kept:

Register of partners and holders of obligations.

Contract Registry u / s 301.

Directors Registry u / s 303.

Registration for transfer of shares.

SS5 – Minutes

This Secretariat Norm deals with the recording and signing of the Minutes of the Meetings.

The minutes must contain:

(a) The appointment of the chairman of the meeting.

(b) The presence of a Quorum.

c) The fact that certain records and documents were available for inspection.

(d) The number of members present in person, including representatives.

(e) The number of powers and the number of shares they represent.

(f) The presence of the Chairman of the Audit Committee at the General Shareholders’ Meeting.

(g) The presence, if applicable, of the Auditors, the Secretary of the Company in Practice who issued the Certificate of Compliance, the observers or scrutineers appointed by the Court.

(h) Reading of the call for the meeting.

(i) Read the auditors’ report.

(j) Summary of the President’s opening remarks.

(k) Summary of clarifications provided.

(l) With respect to each resolution, the type of resolution, the names of the people who proposed and supported and the majority with which said resolution was approved. Resolutions must be written in present tense.

SS6 – Transfer and transfer of shares

This Secretariat Regulation deals with the procedure of Transfer and Transfer of shares owned individually and jointly. The record and the records corresponding to the transmission must be kept permanently and be in the custody of the secretary of the company or of any other person authorized by the Board for this purpose.

Factors that influence the quality of Corporate Governance: –

1. Management integrity

2. Skill of the Board

3. Adequacy of the process

4. Quality of corporate reports

5. Stakeholder participation

6. Quality of corporate reports

Reports of the Corporate Governance Committee: –

Narayana Murthy Report on Corporate Governance: –

Corporate governance is beyond the purview of the law. It stems from the culture and mindset of management and cannot be regulated solely by legislation. Corporate governance is about openness, integrity, and responsibility.

It is a key element to improve the economic efficiency of the company. The credibility offered by corporate governance also helps to improve the confidence of investors, both domestic and foreign. It involves a set of relationships between the management of a company, its Board, shareholders and stakeholders.

Kumarmangalam Birla Corporate Governance Committee: –

All companies must submit a quarterly compliance report to the stock exchanges within 15 days of the end of the financial reporting quarter.

The Report must be presented by the Compliance Officer or by the Executive Director after obtaining the due approvals, in the following clauses: –

Board of Directors

Audit Committee

Shareholder / Investor Claims Committee

Directors Remuneration

Board procedures

Management

Shareholders

Corporate Governance Report

IIC – Desirable corporate governance: –

Corporate governance helps maximize long-term shareholder value. It is more of a corporate way of life than mere legal duress. Four ideas, which should be the guiding force of the company’s philosophy on Corporate Governance are: –

– Transparency

– Responsibility

– Disclosure

– Value creation.

The Code of Business Conduct and Ethics helps ensure compliance with legal requirements and other standards of business conduct. All company employees and trainees are expected to read and understand this code of ethics, comply with all applicable policies and procedures, and ensure that all agents and contractors know, understand, and adhere to these standards.

The Company expects all employees, agents and contractors to exercise good judgment to ensure that all employees, agents and contractors maintain a competitive, efficient, positive, harmonious and productive work environment and business organization.

Inside information trafficking: –

Insider trading is the trading of shares or other securities of a corporation (for example, bonds or stock options) by insiders, such as officers, key employees, directors, or holders of more than ten percent of the shares of the company. Insider trading may be perfectly legal, but the term is often used to refer to a practice, illegal in many jurisdictions, in which an insider or related party deals in material non-public information obtained during performance. insider functions of the corporation, or otherwise misappropriated.

Prohibition of making communications or advice on matters related to internal trade: –

3. No insider shall:

(i) either on your own behalf or on behalf of any other person, trading securities of a company listed on any stock exchange when in possession of any unpublished price sensitive information; gold

(ii) communicate, advise or procure, directly or indirectly, any unpublished price sensitive information to any person who, while in possession of such unpublished price sensitive information, will not trade securities.

(iii) Provided that nothing of the above will be applicable to any communication required in the ordinary course of business or under any law.

3A. No company will deal with the securities of another company or associate of that other company while in possession of unpublished price sensitive information.