presentation cg final

7/29/2019 Presentation Cg Final

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Group Members Saleiha Sharif

Shams-ud-Din

Farhan Kaleemi

Asim Ali Hashmi

Haseeb Zahrab

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Corporate Corporateis adjective meaning of or relating to a corporation derived

from the noun corporation.

A corporation is an organization created (incorporated) by a group ofshareholders who have ownership of the corporation.

The elected Board of directors appoint and oversee management of the

corporation.


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Governance

Oxford English Dictionary defines Governanceas the act, manner,

fact or function of governing, sway, control

The word has Latin origins that suggest the notion of 'steering'. It deals

with the processes and systems by which an organization or society

operates.


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Corporate Governance

It is a broad concept and has been defined and understood differently

by different groups and at different points of time.

The Cadbury Committee report defines it as the system by which

companies are directed and controlled.

It is generally understood as the framework of rules, relationships,

systems and processes within and by which authority is exercised and

controlled in corporations.


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GovernanceOne of the major economic developments of this decade has been

the recent take-off of India,

Total equity issuance reached $19.2 billion in India, up 22%,

while merger and acquisition volume was a record $27.8 billion,

up 38%, driven by a 371% increase in outbound acquisition--exceeding for the first time inbound deal volumes. Debt

issuance reached an all-time high of $13.7 billion, up 28% from

a year earlier ( 2005&06)


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Governance Indian Stock Exchanges, was third highest in the world,

The long-term sustainability of the India success story depends

critically on the state of corporate governance in the country

A stock market that has risen over three-fold in as many years and a

steady inflow of foreign investment.


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Before liberalization

(before 1991) India was one of the poorest economy filled with Corruption

But yet having factories and two stock exchanges and better

comparative to other colonised countries

Corruption and nepotism was hall mark of indian corporate

sector. Directors were artificial and shareholder had no say in

their selection and usually friends of CEO were lying in that.


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After liberalization Unlike other Asian countries, CG in india was not started due to any

serious financial mishap rather it was a step taken to align withchanging world realities.

Also, unlike most Developed countries, the initiative in India was

initially driven by an industry association, the Confederation of IndianIndustry

In December 1995, CII set up a task force to design a voluntarycode of corporate governance

The final draft of this code was widely circulated in 1997

In April 1998, the code was released. It was called Desirable

Corporate Governance: A Code Between 1998 and 2000, over 25 leading companies voluntarily

followed the code: Bajaj Auto, Hindalco, Infosys, Dr. ReddysLaboratories, Nicholas Piramal, Bharat Forge, BSES, HDFC, ICICIand many others


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Cont. Following CIIs initiative, the Securities and Exchange Board of India

(SEBI) set up a committee under Kumar Mangalam Birla to design amandatory-cum-recommendatory code for listed companies

The Birla Committee Report was approved by SEBI in December 2000

Became mandatory for listed companies through the listing agreement,and implemented according to a rollout plan:

2000-01: All Group A companies of the BSE or those in the S&PCNX Nifty index 80% of market cap

2001-02: All companies with paid-up capital of Rs.100 million ormore or net worth of Rs.250 million or more

2002-03: All companies with paid-up capital of Rs.30 million ormore


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Cont Following CII and SEBI, the Department of Company Affairs (DCA)

modified the Companies Act, 1956 to incorporate specific corporategovernance provisions regarding independent directors and auditcommittees

In 2001-02, certain accounting standards were modified to furtherimprove financial disclosures. These were:

Disclosure of related party transactions

Disclosure of segment income: revenues, profits and capitalemployed

Deferred tax liabilities or assets

Consolidation of accounts

Initiatives are being taken to(1) further increase disclosures, and (2)put in place systems that can further strengthen auditorsindependence


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Indian scenarioYear Name of

Committee/Body

Areas/Aspects Covered

1998 Confederation ofIndian Industry(CII)

Desirable Corporate Governance A Code

1999 Kumar MangalamBirla Committee


2002 Naresh ChandraCommittee

Corporate Audit & Governance

2003 N. R. Narayana

Murthy Committee



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Report of the Kumara Mangalam Committee on Corporate Governance(2000). Report of the Committee Appointed by the SEBI on

Corporate Governance under the Chairmanship of Shri KumarMangalam Birla

http://web.sebi.gov.in/co

mmreport/corpgov.ht

ml

Report on Excellence in Corporate Governance (2000). Report of theTask Force constituted by the Department of Companies Affairs,

Ministry of Law, Justice and Company Affairs, Government of

India

http://dca.nic.in/corp-

exc.htm

Report of the Committee on Corporate Audit and Governance (NareshChandra Committee)

http://dca.nic.in/naresh/in

dex.htm

Report of the SEBI Committee on Corporate Governance (2003)underthe chairmanship of Shri N R Narayana Murthy

http://web.sebi.gov.in/co

mmreport/corpgov.p

df

Report of the Expert Committee on Company Law, (2005) JJ IraniCommittee Report, Ministry of Company Affairs, Government of

India

http://dca.nic.in/report_expert_comt.htm

Report of the Consultative Group of Directors of Banks / FinancialInstitutions (2002), under the chairmanship of Dr.A S Ganguly,Reserve Bank of India

http://www.rbi.org.in

Report of the Advisory Group on Corporate Governance (2001), Dr. RH Patil, Reserve Bank of India

http://www.rbi.org.in

Recent Codes/Reports on Corporate Governance in India
http://web.sebi.gov.in/commreport/corpgov.htmlhttp://web.sebi.gov.in/commreport/corpgov.htmlhttp://web.sebi.gov.in/commreport/corpgov.htmlhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/naresh/index.htmhttp://dca.nic.in/naresh/index.htmhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://dca.nic.in/report_expert_comt.htmhttp://dca.nic.in/report_expert_comt.htmhttp://www.rbi.org.in/http://www.rbi.org.in/http://www.rbi.org.in/http://www.rbi.org.in/http://dca.nic.in/report_expert_comt.htmhttp://dca.nic.in/report_expert_comt.htmhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://dca.nic.in/naresh/index.htmhttp://dca.nic.in/naresh/index.htmhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/corp-exc.htmhttp://web.sebi.gov.in/commreport/corpgov.htmlhttp://web.sebi.gov.in/commreport/corpgov.htmlhttp://web.sebi.gov.in/commreport/corpgov.html


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Key players discharging Regulatory

functions Ministry of Company Affairs

RBI - The Banking Regulator

SEBI - The Capital Market Regulator

IRDA The Insurance Regulator

Other regulatory agencies have been set upfor various sectors such as Power, Tele-

Communications.


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Clause 49 deals with CG in India The Listing agreement was first introduced by Bombay Stock Exchange

and later followed by other stock exchanges

SEBI, vide its circular dated February 21, 2000, specified principles of

corporate governance and introduced a new clause 49 in the Listing

agreement of the Stock Exchanges.

The Listing agreement contains 51 clauses

Listing means admission of the securities to dealings on a recognised

stock exchange. The securities may be of any public limited company,Central or State Government, quasi governmental and other financial

institutions/corporations, municipalities, etc.

Listing helps in free transferability , leads to transparency in disclosure

of information and ensures official quotation is available.


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Applicability of clause 49

All listed entities having a paid up share capital of Rs 3 crores and above or

net worth of Rs 25 crores or more at any time in the history of the company

For other listed entities which are not companies, but body corporate (e.g.private and public sector banks, financial institutions, insurance companies

etc.) incorporated under other statutes, the revised Clause 49 will apply to

the extent that it does not violate their respective statutes and guidelines or

directives issued by the relevant regulatory authorities.

The revised Clause 49 is not applicable to Mutual Funds

Revised clause 49 has come into effect from January 1, 2006


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Birds eye view of Clause 49

Annexure ContentsAnnexure I Clause 49 - Corporate Governance

Annexure I A Information to be placed before Board of Directors

Annexure I B Format of Quarterly Compliance Report onCorporate Governance

Annexure I C Suggested List of Items to Be Included in the

Report on Corporate Governance in the AnnualReport of Companies

Annexure I D Non-Mandatory Requirements


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Annexure I

I. Board of Directors

II. Audit Committee

III. Subsidiary Companies

IV. Disclosures

V. CEO/CFO certification

VI. Report on Corporate Governance

VII. Compliance


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Overview of Clause 49 -Corporate Governance

I. Board of Directors

(A) Composition of Board

(B) Non executive directors compensation and disclosures

(C) Other provisions as to Board and Committees

(D) Code of Conduct

II. Audit Committee

(A) Qualified and Independent Audit Committee(B) Meeting of Audit Committee

(C) Powers of Audit Committee

(D) Role of Audit Committee

(E) Review of information by Audit Committee


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Overview of Clause 49III. Subsidiary Companies

IV. Disclosures(A) Basis of related party transactions

(B) Disclosure of Accounting Treatment

(C) Board Disclosures Risk management

(D) Proceeds from public issues, rights issues, preferential issues etc.

(E) Remuneration of Directors

(F) Management

(G) Shareholders


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Overview of Clause 49.V. CEO/CFO certification

a) Financial Statements

(i) Do not contain any materially untrue statement.

(ii) Present true and fair view of the state of affairs and are incompliance with AS and applicable laws..

b) No transactions entered is fraudulent or illegal.

c) Accepted the responsibility for establishing and maintaining

Internal Controls for the purpose of financial reporting(amended

on 13.1.2006)

d) Disclosed to the auditors and Audit Committee deficiencies in the

design or operation of internal control.

VI. Report on Corporate Governance

VII. Compliance


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Major challenges

Rule are better shaped just on paper but actual

implementation is yet to be made sure

The true spirit has yet not been implemented at average

Indian companies

Sophistication in law is yet required.

Corporate governance is quite visible on in few notable

companies.

And widespread corruption is required to be curbed as

well.


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References

R. Chakrabarti,W. Megginson,P. Yadav(2007). Corporate

Governance in India, Journal of Applied Corporate Finance

Varma R.J(1997). Corporate Governance in India: Discipliningthe Dominant Shareholder, The journal of the Indian, 9(4), 5-18.

SAMEER RASTOGI Indian Institute of Foreign Trade NEW DELHICorporate Governance dated 5TH MARCH 2005

CORPORATE GOVERNANCE & AUDIT COMMITTEE by rajkumar


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References

http://www.sebi.gov.in/ - Securities and Exchange Board of India

http://www.bseindia.com/ - Bombay Stock Exchange Limited

http://www.nfcgindia.org/library_int.htm - National Foundation for


http://www.ita.doc.gov/goodgovernance/ -International Trade

Administration

http://www.oecd.org/ -Organisation for Economic Co-operation and

Development http://www.corpgov.net/ - Corporate governance network
http://www.sebi.gov.in/http://www.bseindia.com/http://www.nfcgindia.org/library_int.htmhttp://www.ita.doc.gov/goodgovernance/http://www.oecd.org/http://www.corpgov.net/http://www.corpgov.net/http://www.oecd.org/http://www.ita.doc.gov/goodgovernance/http://www.nfcgindia.org/library_int.htmhttp://www.bseindia.com/http://www.sebi.gov.in/


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References

Doing Things Right: Corporate Governance in IndiaOmkarGoswami Chief Economist Confederation of Indian Industry

11-13 November, Mumbai, India

http://web.sebi.gov.in/commreport/corpgov.html http://dca.nic.in/corp-exc.htm http://dca.nic.in/naresh/index.htm http://web.sebi.gov.in/commreport/corpgov.pdf http://dca.nic.in/report_expert_comt.htm

http://www.rbi.org.in http://www.rbi.org.in
http://web.sebi.gov.in/commreport/corpgov.htmlhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/naresh/index.htmhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://dca.nic.in/report_expert_comt.htmhttp://www.rbi.org.in/http://www.rbi.org.in/http://www.rbi.org.in/http://www.rbi.org.in/http://dca.nic.in/report_expert_comt.htmhttp://web.sebi.gov.in/commreport/corpgov.pdfhttp://dca.nic.in/naresh/index.htmhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/corp-exc.htmhttp://dca.nic.in/corp-exc.htmhttp://web.sebi.gov.in/commreport/corpgov.html

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