• Corporate Governance refers to the way

a corporation is governed.

• It is the technique by which companies

are directed and managed.

• It means carrying the business as per

the stakeholders’ desires.

• It is actually conducted by the board of

Directors and the concerned committees
for the company’s stakeholder’s benefit.
Four P's of corporate governance

people,
process,
performance, and
purpose.
Corporate governance is important…..

 Corporate governance is important

because
➢ it creates a system of rules and
practices that determine how a
company operates and
➢how it aligns the interest of all its
stakeholders.
 Core Principles of Corporate Governance
A company that follows the hardcore core
fundamentals of good corporate governance will
generally surpass other companies in terms of
financial advancement.
 The core principles of sound corporate
governance include
 Fairness,
 Accountability,
 Responsibility &
 Transparency.
— Fairness:
Fairness touches on the points of uniform and equal
treatment of all the shareholders in reference to receival of
considerations regarding shareholdings.

The fairer the company appears to stakeholders, the more

likely it is that it can endure in the league.
— Accountability
Corporate accountability is an act of responsibility and
obligation to provide an explanation for the company’s actions
and activities. Corporate Accountability includes the
followings:
• Presentation of a balanced and simple analysis of the
company’s orientation and prospects.
• Responsibility for determining the character and extent of the
adopted risks by the company.
• Maintenance of adequate risk management and internal
control structure.
• Setting up formal and unclouded arrangements for corporate
reports and a suitable relationship with the company’s
auditor.
• Proper communication with shareholders regarding
diversification, progress and financial reports at frequent
— Responsibility:
The CEO and Board of Directors are accountable to the
shareholders on behalf of the company regarding the
execution of responsibilities.

Thus, they should exercise their authority with full

responsibility.

The Board of Directors is responsible for conducting the

management of the business, appointing the suitable CEO,
overseeing the affairs of the company and keeping an eye
on the performance of the company.
— Transparency:
Transparency means a company should reveal an informative
piece of data about their activities to shareholders and other
stakeholders.

It also includes the open-mindedness and willingness to

divulge financial figures which are genuine and correct in
reality.

The unveiling of reports regarding the organization’s

accomplishments and activities should be on time and strive
for accuracy.

Such steps ensure the investors’ access to transparent and

factual data which finely mirrors the financial,
environmental and social position of the organization.
Principles Players of Corporate Governance
Board of Directors
Management
Banks and lenders

Customers

Shareholders
Employees Environment &
the community at large
Regulators
Suppliers

11/20/2013 13
Examples of Corporate Governance
— HDFC Bank
(Industry – Private Banking and Financial Services)

HDFC Bank identifies the significance of good corporate governance,

which takes care of the long-term interests of shareowners and helps to
win the public trust in the Company. Therefore, the Corporate
Governance scheme is introduced to proffer a course and structure for
managing and regulating the bank in accordance with the principles of
superlative corporate governance policies.

HDFC Bank was amongst the first four companies which earned a
Corporate Governance and Value Creation (GVC) rating by The Credit
Rating Information Services of India Limited (CRISIL). The bank has
been successful in achieving a ‘CRISIL GVC Level 1’ rating for the last
two consecutive years. This symbolizes that the bank has the potential
to create wealth for all its stakeholders while preaching the highest
degree of corporate governance practices. The Bank truly believes in
transparent disclosures and the empowerment of shareholders for
weaving value.
The chart shows the past 17 years of data from the year 2000. Going by
the chart, HDFC bank has generated huge wealth over the years and is
known for its laurel worthy Corporate Governance.
On the contrary, in recent times, there are several specimens
that have grabbed headlines regarding massive failures of
corporate governance. One such is the Punjab National Bank (
PNB) Scandal.

— Punjab National Bank (PNB)

(Industry: Public Sector Bank)

Punjab National Bank (PNB) scam was put up across all news
channels for a scam size of size 12,000 crores. The fact that the main
accused i.e. Nirav Modi was able to siphon off funds without being
suspected by investigating committees or, the income tax
department points out to the mammoth loopholes in the
governance. The existence of proper corporate governance in
Punjab National Bank (PNB) could have singled out the large scale
scandal of this level.
In the chart, it is clearly evident how the share prices started falling
just prior to the announcement of the scam and went on a downhill
journey since then.
 UNIT III

Corporate Board-
Its Powers, Responsibilities
& Development in India

1
 Role of the Board of Directors

Corporation
 a mechanism established to allow different
parties to contribute capital, expertise and labor
for their mutual benefit
The corporation is governed by the board of
directors that oversees top management
with the concurrence of the shareholders.

2-2
 Role of the Board of Directors

Corporate governance
 refers to the relationship among the
 board of directors,
 top management and
 shareholders
in determining the direction and performance of
the corporation.

2-3
 Responsibilities of the Board

Effective Board Leadership

Strategy of the Organization

Risk vs. Initiative

Succession Planning

Sustainability
2-4
 Responsibilities of the Board

Due care
 the board is required to direct the affairs of the
corporation but not to manage them.
 If a director or the board as a whole fails to act with
due care and, as a result, the corporation is in
some way harmed, the careless director or
directors can be held personally liable for the harm
done.

2-5
 Role of the Board in
Strategic Management
Monitor developments inside and outside
the corporation
Evaluate and Influence management
proposals, decisions and actions
Initiate and Determine the corporation’s
mission and strategies

2-6
Board of Directors’ Continuum

2-7
 Members of a Board of Directors

Inside directors
 typically officers or executives employed by the
corporation
Outside directors
 may be executives of other firms but are not
employees of the board’s corporation

2-8
 Members of a Board of Directors

Agency theory
 states that problems arise in corporations
because the agents (top management) are not
willing to bear responsibility for their decisions
unless they own a substantial amount of stock in
the corporation.

2-9
 Members of a Board of Directors

Stewardship theory
 proposes that, because of their long tenure with
the corporation, insiders (senior executives) tend
to identify with the corporation and its success

Copyright © 2015 Pearson

10
Education, Inc.
 Members of a Board of Directors
 Affiliated directors
 though not really employed by the corporation,
handle the legal or insurance work for the company
or are important suppliers (and thus dependent on
the current management for a key part of their
business).
 Retired executive directors
 used to work for the corporation, partly responsible
for past decisions affecting current strategy
 Family directors
 descendants of the founder and own significant
blocks of stock
2-11
 Codetermination: Should Employees
Serve on Boards?
Codetermination
 the inclusion of a corporation’s workers on its
board, began only recently in the United States
 Although the movement to place employees on the
boards of directors of U.S. companies shows little
likelihood of increasing, the European experience
reveals an increasing acceptance of worker
participation on corporate boards.

2-12
 Interlocking Directorates
Direct interlocking directorate
 when two firms share a director or when an executive of one firm sits on the
board of a second.
 An interlocking directorate occurs when the same person sits on the board
of directors of two or more companies. There is a danger that an interlock
between competing firms (direct interlocks) may be used to co-ordinate
behaviour and reduce inter-firm rivalry.
 Indirect interlocking directorate
 when two corporations have directors who serve on the board of a third firm
 where members of two different Boards serve together on the Board of a
third organisation. Directors who are appointed to more than one Board are
known as multiple directors.

2-13
 Interlocking Directorates

Interlocking directorates
 Interlocking directorates is a business practice wherein a
member of one company's board of directors also serves
on another company's board or within another
company's management. Under the antitrust legislation,
interlocking directorates are not illegal as long as the
corporations involved do not compete with each other.
 useful for gaining both inside information about an
uncertain environment and objective expertise about
potential strategies and tactics.

2-14
 Nomination and Election of
Board Members
 The Board Nomination Process for Board Members
➢ Robert’s Rules, also known as parliamentary procedure,
outlines the various ways that nominees may be presented to
the board. Board members are typically nominated by a
nominating committee, but they can also be nominated by
ballot, or from the floor. Nominations may also be taken by mail
or by petition, though these methods are less common. Voting
is accomplished through written ballots, voice voting, or a roll
call vote. The actual process for how nominations and voting are
conducted will be outlined in the organization’s bylaws.

15
 Kinds of Nominations
 Nominating Committees
➢ An organization’s bylaws will state which committee has
responsibility for nominating board members. This may
be the governance committee, a board development
committee, or both of them combined. The bylaws may
also state that a separate nominating committee be
formed and outline how the committee is formed.
➢ Prior to seeking nominations, the board secretary should
give the committee a membership list, a copy of the
bylaws, a description of board member duties, and
requirements.
16
 Kinds of Nominations (cont-d)
 The first step for the nominating committee is to evaluate current
board members to assess whether they are performing
satisfactorily and should be considered for re-election.
Evaluations may be performed by a subset of the nominating
committee or an independent third party to ensure fairness.
 The second step for the nominating committee is to receive
recommendations for new board members from management or
current board members. The nominating committee should
review the resumes of potential candidates, assessing their skills
and experience to determine if they meet qualifications for the
position.

17
 Kinds of Nominations (cont-d)
 In reviewing candidate profiles, the committee should also consider criteria
that includes:

➢ Proven leadership
➢ Previous board experience
➢ Knowledge and experience
➢ Diversity-including age, gender, ethnicity, race, disabilities, geography
➢ Experience with large and complex organizations
➢ Current or prior CEO, COO, or CFO level experience
➢ Skillset-including finance, legal, auditing, government affairs, public relations,
community experience, and knowledge of the organizations

18
 Kinds of Nominations (cont-d)
 The third step for the nominating committee is to give a list of candidates to the
full committee for discussion and review.

 The committee then makes contact with each candidate to make an assessment
for a high level of personal and professional integrity, as well as to assess their
level of commitment to the organization, and availability. This is often done by
assigning one member of the nominating committee to one candidate, who will
bring a candidate summary with recommendations back to the full committee.
Additional interviews by the nominating committee and the CEO may be
necessary to ensure due diligence. Additional interviews may be conducted with
the assistance of a third party.

 The committee forms a final slate of recommended candidates to the full board
for formal approval. Nominees should not be present at this meeting to allow for
open discussion by the board.
19
 Nomination and Election of
Board Members
97% of boards use nominating committees to
identify potential board members
Staggered boards
 only a portion of board members stand for re-
election when directors serve more than one year
terms

2-20
 Organization of the Board

The size of a board is determined by the

corporation’s charter and its by- laws, in
compliance with state laws.
Although some states require a minimum
number of board members, most
corporations have quite a bit of discretion in
determining board size.

2-21
 Organization of the Board

The average large, publicly held firm has 10

directors on its board
The average small, privately-held company
has four to five members.

2-22
 Organization of the Board

Lead director
 consulted by the Chair/CEO regarding board
affairs and coordinates the annual evaluation of
the CEO
96% of companies combine the Chairman
and CEO positions had a lead director.

2-23
 Organization of the Board

The most effective boards accomplish much

of their work through committees.
Although they do not usually have legal
duties, most committees are granted full
power to act with the authority of the board
between board meetings.

2-24
 Nomination and Election of
Board Members
Criteria for a good director include:
 Willingness to challenge management when
necessary
 Special expertise that is important to the
company
 Available for outside meetings to advise
management
 Expertise on global issues
 Understands the firm’s key technologies and
processes
2-25
Thank You.

26
 Regulatory Framework of
Corporate Governance in India
Reforms of Companies Act
Session :16
Regulatory Framework of CG in India
THE COMPANIES ACT, 2017
New rules of the game
SALIENT FEATURES
The entire act has been divided into 29 chapters.

COMPANIES ACT 1956 COMPANIES ACT 2013

13 Parts 29 Chapters

658 Sections 470 Sections

15 Schedules 7 Schedules
 HIGHLIGHTS OF THE COMPANIES ACT,
2013

❖ Passed in Lok Sabha on 18th December,

2012 (Bill no. 121 of 2011)
❖ Passed in Rajya Sabha on 8th August,
2013 (Bill no. 121 of 2011)
❖ Received Ascent of President 29th
August, 2013
 Companies Act 2017

•The 2017 Amendment Act consists of 93 amendments to

the 2013 Companies Act, resulting in changes related to legal
definitions, corporate governance, and management
compliance. It impacts different aspects of business
management in India, including key structuring, disclosure,
and compliance requirements.
Here are some of the key provisions

• Signing of Documents (Section 7): Any documents/

file which requires authentication can be signed by the
company employees (authorized by the Board of Directors)
on behalf of the company under the new amendments Act.

• Prospectus of the Company (Section 8): The new

amendment states that the rules and regulations to be
mentioned in the prospectus must be made according to the
SEBI guidelines and not the Companies Act.
•Debentures and Issue of Shares (Section 12): As per
the new RBI Act, 1934 or the Banking Regulation (Act), 1949
if any debt restructuring scheme or any debt is converted to
shares, the company can sell those shares at a discounted
price to its creditors.

•Declaration of Profits and Payment of Dividends

(Section 32): Under the new amendment the company is
exempted to declare notional and unrealized gain, changes
/revaluation of assets, liability on assets etc. while making
profit declaration and payment of dividends.

•Reports of Subsidiary (ies) (Section 38): Audited/

unaudited reports of the foreign subsidiary (ies) can be
placed in the same audit report of the holding company. No
separate audit report is required under the new amendment.
•Meetings of the Board (Section 56): Under the new amendment
Act, the directors can participate in the key managerial decisions of
the company by video-conferences and audio visuals, provided that
sufficient quorum of board of directors are physically present.

•Annual General Meeting (Section 26): The new amendment

allows the unlisted companies to hold their meeting at any place in
the country with the consent of all the members. But, the provision
remains same for other companies; it is to be conducted either in
the headquarters or any registered office. So, the new amendment
gave more freedom to unlisted companies.

•Repealing restrictions on Insider Trading (Section 64, 65):

The directors can now deal in company securities and do insider
trading of securities, as per the Securities Act, 1933
E- Governance and
Green Governance
 What is E-Governance?

E-governance is the application of

Information Technology to the processes
of government functioning to bring about…

Smart
Moral
Accountable
Responsive
Transparent Governance.
How it was introduced in THE WORLD

The United States of America

was especially driven by the 1998
Government Paperwork
Elimination Act, introduced by
former President Mr. Bill
Clinton on December 17, 1999.
4 PILLARS of E-Governance
BENEFITS of E-Governance

➢Cost effective
➢Speed, efficiency & convenient
➢Minimum use of hardcopy

[ENVIRONMENTAL BONUS]
➢Increases interest of citizens
➢Easily accessible
India's initiative towards
E-governance

➢Mission 2007 : connected villages

through wireless services.
➢E- suvidha : provide services like birth
certficate, marriage certficate &
information relating to agriculuture.
➢National tax information exchange
system project.
SCOPE of E-Governance
Major Implementation areas

➢ Public Grievances: Ration Card ,Transportation

facilities.
➢ Rural Services: Land Records.
➢ Police: FIR registrations , Lost and Found details.
➢ Social Services: Birth, School, Death Certificates.
➢ Public Information: Information about Employment,
hospitals , Railways ,etc.
➢ Agricultural Sector: Fertilizers, Seeds.
➢ Utility Payments: Electricity, Water, Telephone bills.
➢ Commercial: Income tax , Custom duty , Excise duty.
 E- Services

COMPUTERIZED PALM
CARD SWIPE
IMPRESSION
Modern method of voting in E-Governance

E- Voting
CHALLENGES of E-Governance

➢Lack of Integrated services

➢Lack of KEY PERSONS
➢Population
➢Lack of communication between
different departments
➢Different Languages
 GREEN INITIATIVES
IN
CORPORATE GOVERNANCE
 What is all about Green Initiative?

❖ Minimization of consumption of natural

resources
❖ Maximization of Conservation of natural
resources.
● To maintain Sustainable development.

● To save non renewable natural resources.

● To do away with human intervention.

● To cut the timelines in servicing of

documents.

● To allow paperless compliances by the

companies.
 GREEN INITIATIVES
IN CORPORATE GOVERNANCE

● Certification of e-forms under the Companies Act, by

the Practicing professionals.
● Video conferencing facility for shareholders.
● Company shall provide video conference facility
wherever a director has given his contention in
writing.
● In order to assure a secured platform for E-voting the
MCA has approved two agencies namely NSDL & CDSL.
 Benefits of Green Initiatives

● If companies follow the green initiative by servicing of annual

reports through e-mail, My view is supported with simple
calculations :
● Weight of an A4 size paper(210x297mm)= 4.366 gm
● Pulp contained in a 25 m high and 30 cm diameter Pine Tree
= 520 Kg
● Listed companies on Bombay Stock Exchange ~ 5050
● Total Investor Accounts in country ~6 millions
● Total number of Annual Reports required =30204000000
● Assuming each report will have 100 pages
● Total weight of paper used= 1.32 x108 Kg
● Number of trees needed to print that much paper = 256000
 Green computing best practices

• Develop a sustainable green computing plan

• Recycle
• Make environmentally sound purchase decisions
• Reduce paper consumption
• Conserve Energy
 Recylce

• Dispose e-waste according to central,

state and local regulations.
• Recycle computers through manufacturers
recycling services.
•Manufacturers must offer safe end-of-life
management and recycling options when
products become unusable.
Make environmentally sound purchase decisions

• Purchase of desktop computers, notebooks and

monitors based on environmental attributes.

• Provide a clear, consistent set of performance

criteria for the design of products.

• Use sever and storage virtualization that can

help to improve resource utilization, reduce
energy costs and simplify maintenance.
 Reduce paper consumption

• Reduce paper consumption by use of e-mail and

electronic archiving.

• Use of "track changes" feature in electronic

documents, rather than recline corrections on
paper.

• While printing documents, make sure to use

both sides of the paper, recycle regular, use
smaller fonts and margins, and selectively print
required pages.
 Conserve energy

● Use liquid crystal display(LCD) monitors rather than

cathode rat tube(CRT).
● Use notebook computers rather than desktop
computers whenever possible.
● Power down the CPU and all peripherals during
extended periods of inactivity.
● Power up and power down energy intensive peripherals
such as laser printers according to need.
Role of SEBI in Corporate Governance
 Introduction
Security Exchange Board of India (SEBI)
▪Securities and Exchange Board of India (SEBI) was formed after the Indian
Parliament passed the Securities and Exchange Board of India Act, 1992 in response
to the Financial Services Assessment Program.
▪SEBI Actually established in the year 1988 and given statutory power in 1992.
▪With the growth in the dealings of stock markets, lot of malpractices also started in
stock markets such as price rigging, ‘unofficial premium on new issue, and delay in
delivery of shares, violation of rules and regulations of stock exchange and listing
requirements. Due to these malpractices the customers started losing confidence
and faith in the stock exchange. So government of India decided to set up an
agency or regulatory body known as Securities Exchange Board of India
(SEBI).
 Purpose and Role of SEBI
The main purpose of SEBI is to keep a check on malpractices
and protect the interest of investors.

❖ It was set up to meet the needs of three groups.

Issuers:
For issuers it provides a market place in which they can
raise finance fairly and easily.
Investors:
For investors it provides protection and supply of accurate
and correct information.
Intermediaries:
For intermediaries it provides a competitive professional
market.
 Objectives of SEBI
•To regulate the activities of stock exchange.
•To protect the rights of investors and ensuring safety to their investment.
•To prevent fraudulent and malpractices by having balance between self
regulation of business and its statutory regulations.
•To regulate and develop a code of conduct for intermediaries such as
brokers, underwriters, etc.
The Role of SEBI in Corporate Governance

The Securities Exchange Board of India is essential to corporate

governance of India's securities market, as it serves as the central
body that ensures investors are protected and the securities
market is regulated.
Corporate governance is the manner in which companies or market
systems operate, including the rules, regulations, policies and
standards for accountability, transparency and general corporate
integrity.
EMAIL
SEBI in regulating Indian Capital Market more deeply with following
points:

1. To provide license to dealers and brokers:

SEBI has power to provide license to dealers and brokers of capital

market. If SEBI sees that any financial product is of capital nature, then
SEBI can also control to that product and its dealers.
One of main example is (Unit Linked Insurance Plan) ULIPs case. SEBI
said, " It is just like mutual funds and all banks and financial and
insurance companies who want to issue it, must take permission from
SEBI.”

2. To Stop Fraud in capital Market:

SEBI has many powers for stopping fraud in capital market. It can ban
on the trading of those brokers who are involved in fraudulent and
unfair trade practices relating to stock market. It can impose the
penalties on capital market intermediaries if they are involve in insider
trading
3. Power to make rules for controlling stock exchange.

SEBI has power to make new rules for controlling stock exchange in
India. For example, SEBI fixed the time of trading 9 AM and 5 PM
in stock market.

4. To Control the Merger, Acquisition and takeover the companies.

Many big companies in India want to create monopoly in capital

market. So, these companies buy all other companies or deal of
merging. SEBI sees whether this merge or acquisition is for
development of business or to harm capital market.

5. To audit the performance of stock market.

SEBI uses his powers to audit the performance of different Indian

stock exchange for bringing transparency in the working of stock
exchanges.
6. To make new rules on carry – forward instructions.
• Share trading transactions carry forward can not exceed 25% of
broker's total transactions.
• 90 day limit for carry forward.

7. To create relationship with ICAI.

ICAI is the authority for making new auditors of companies. SEBI
creates good relationship with ICAI for bringing more
transparency in the auditing work of company accounts because
audited financial statements are mirror to see the real face of
company and after this investors can decide to invest or not to
invest. Moreover, investors of India can easily trust on audited
financial reports. After Satyam Scam, SEBI is investigating with
ICAI, whether CAs are doing their duty by ethical way or not.
8. Introduction of derivative contracts on Volatility Index.
For reducing the risk of investors, SEBI has now been decided to
permit Stock Exchanges to introduce derivative contracts on Volatility
Index, subject to the condition that;
a. The underlying Volatility Index has a track record of at least one
year.
b. The Exchange has in place the appropriate risk management
framework for such derivative contracts.

2. Before introduction of such contracts, the Stock Exchanges shall

submit the following:
i. Contract specifications
ii. Position and Exercise Limits
iii. Margins
iv. The economic purpose it is intended to serve
v. Likely contribution to market development

vi. The safeguards and the risk protection mechanism adopted by

the exchange to ensure market integrity, protection of investors and
smooth and orderly trading.

vii. The infrastructure of the exchange and the surveillance system

to effectively monitor trading in such contracts, and

viii. Details of settlement procedures & systems

ix. Details of back testing of the margin calculation for a period of

one year considering a call and a put option on the underlying with a
delta of 0.25 & -0.25 respectively and actual value of the underlying.
9. To Require report of Portfolio management Activities.
➢ SEBI has also power to require report of portfolio management to
check the capital market performance. Recently, SEBI sent the
letter to all Registered Portfolio Managers of India for demanding
report.

10. To educate the investors

➢ Time to time, SEBI arranges scheduled workshops to educate the
investors. On 22 may 2010 SEBI imposed workshop. If you are
investor, you can get education through SEBI leaders by getting
update information.
 Conclusion
As Indian Companies compete globally for access to capital markets, many are finding
that the ability to benchmark against world class organization is essential.
• Corporate governance and economic development are intrinsically linked.
• Effective corporate governance system promote the development of strong
financial systems.
Topics to be covered:
 The role of the CFO (Chief Financial Officer) has been
changing over the past twenty years. Originally, the role of
the CFO revolved around producing and analyzing the
financial statements. However, because of the
computerization of the accounting function the need for
accounting skills in performing the roles and responsibilities
of a CFO diminished.

 The Chief Financial Officer (CFO) of a company has

primary responsibility for the planning, implementation,
managing and running of all the finance activities of a
company, including business planning, budgeting,
forecasting and negotiations. The CFO job description
should also extend to obtaining and maintaining investor
relations and partnership compliance.
CFO duties and responsibilities: As part of an executive management
team, the CFO will have interaction with various members of a
company, both senior and junior. A CFO job description should include:
 Providing leadership, direction and management to the finance and
accounting team
 Providing strategic recommendations to the CEO/president and
members of the executive management team
 Managing the processes for financial forecasting and budgets, and
overseeing the preparation of all financial reporting
 Advising on long-term business and financial planning

 Establishing and developing relations with senior management and

external partners and stakeholders
 Reviewing all formal finance, HR and IT related procedure
 Guide: CS works as an advisor by suggesting the role and power of
the chairman and director of the company.

 Company Secretary Audit: A CS makes sure that the company is

following the laws and guidelines explained in the memorandum in
order to make the easy functioning of the organization, as per the rules
mentioned in Section 204 of the Companies Act, 2013.

 Legal Advisor For Business: The Company Secretary firm knows

the laws of the company very well and works as a legal advisor for the
executives. During court of law matters, he advises on the company
rights by taking the deep subject knowledge from the expert.
 Link Between Inter and Intra Company Works: A Company
Secretary plays a role of connectors between the investors, board of
directors, and authorities who work in the direction of the company’s
functioning and regulation.

 Keep Record Of Legal Works: The professional company secretary

of India maintains the information regarding investors, shares,
directors, and members in a record.

 Scheduling Company Meetings: He is also responsible for arranging

the shareholders and company board meeting.

 Maintaining Company Records: The company secretary

firm oversees the matter of maintaining some records of a company
even if it is not strictly needed by the law.
 Command Over Corporate Governance: A structure of good
corporate governance is important for companies irrespective of the
size, but it becomes difficult with a load of increasing stakeholders
and company size. In India, it is the Company Secretary advises the
board of directors on corporate governance and director’s duties. This
comprises managing the interest area of the shareholders, issues of
conflict in interest, investor guidelines and handling with applicable
codes.

 Company Statutory Register: It is the necessity of companies to

maintain certain statutory registers.
 An auditor is an individual who is appointed to inspect the
books of accounts of a company, the validity and accuracy of
the transactions contained therein. He also forms an opinion
on the overall view of the financial statements, whether the
statements depict a true and fair view of the entity’s financial
position.

 The duties of an auditor have been laid down by the

Companies Act, 2013, provided in Section 143. The Act
explains the duties in a simplified manner, although the list
given is not exhaustive.
 Prepare an Audit Report - An audit report, in simple terms, is an
appraisal of a business’s financial position. The auditor is
responsible for preparing an audit report based on the financial
statements of the company.

 Form a negative opinion, where necessary - The auditor’s report

has a high degree of assurance and reliability because it contains
the auditor’s opinion on the financial statements. Where the auditor
feels that the statements do not depict a true and fair view of the
financial position of the business, he is also entitled to form an
adverse opinion on the same.

 Make inquiries - One of the auditor’s important duties is to make

inquiries, as and when he finds it necessary.
 Lend assistance in case of a branch audit - Where the auditor is
the branch auditor and not the auditor of the company, he will lend
assistance in the completion of the branch audit. He shall prepare a
report based on the accounts of the branch as examined by him and
then send it across to the company auditor.

 Comply with Auditing Standards - The Auditing Standards are

issued by the Central Government in consultation with the National
Financial Reporting Authority. These standards aid the auditor in
performing his audit duties with relevant ease and accuracy.

 Reporting of fraud
 Adhere to the Code of Ethics and Code of Professional Conduct -
The auditor, being a professional, must adhere to the Code of Ethics
and the Code of Professional Conduct. Part of this involves
confidentiality and due care in the performance of his duties.

 Assistance in an investigation - In the case where the company is

under the scope of an investigation, it is the duty of the auditor to
provide assistance to the officers as required for the same.

 Hence, it can be seen that the duties of the auditor are pretty diverse,
it has an all-round and far-reaching impact. The level of assurance
provided by a set of audited financial statements is comparatively far
higher as compared to regular unaudited financial statements.
The manager’s functions are many and varied, including:
 Hiring and staffing, Training new employees

 Coaching and developing existing employees

 Dealing with performance problems and terminations

 Supporting problem resolution and decision-making

 Conducting timely performance evaluations

 Translating corporate goals into functional and individual goals

 Monitoring performance and initiating action to strengthen results

 Monitoring and controlling expenses and budgets

 Tracking and reporting scorecard results to senior management

 Planning and goal-setting for future periods

 A conflict of interest is a situation in which an individual has competing
interests or loyalties because of their duties to more than one person or
organization. A person with a conflict of interest can't do justice to the actual or
potentially conflicting interests of both parties.

A conflict of interest can exist in many different situations, involving personal

loyalty and loyalty to a private employer, a government employer, or a
professional relationship. The easiest way to explain the concept of conflict of
interest is by using some examples:
 A public official whose personal interests conflict with their expected loyalty to
the organization.
 A person who has a position of authority in one business that conflicts with his
or her interests in another business or organization.
 An attorney who attempts to represent both parties in a divorce
Conflict of Interest Examples

 Several common activities that can create a conflict of interest are nepotism,
self-dealing, and excess compensation.

 Nepotism is the practice of giving favors to relatives and close friends, in

matters of hiring, promotion, transfer, or termination. The term comes from
the word for "nephew," it was common practice in ancient times. Nepotism
is considered a conflict of interest because the relative may not be the best
person for the job.
 Self-dealing is an action taken by a corporate fiduciary
(someone who has a fiduciary duty) for that person's personal
gain, rather than for the benefit of the company. Examples
including using corporation funds as a personal loan, or
buying company stock based on insider information (also
an insider trading violation),
 Excess compensation In a non-profit organization, setting
compensation or benefits for officers, directors or trustees may
result in a conflict of interest. For example, paying an
employee in a position or substantial authority excessive
compensation serves a private interest.
 Confidentiality policies restricting the flow of at least certain kinds
of confidential information to company outsiders are common but
hardly universal. Although these policies historically were often
drafted to ensure that employees did not reveal trade secrets, it is
becoming far more common for them also to deal with confidential
company information. However, we do not think even an express
prohibition on disclosing confidential company information is
sufficient clearly to protect confidential board information.
Accordingly, we recommend that companies review their
confidentiality policies to ensure that they expressly cover not only
director misuse of confidential company information but also
director misuse of confidential board information
 In order to prevent the misuse or inadvertent disclosure of
material information, the procedures set forth below should be
observed at all times:

 Documents and files containing confidential information should be

kept in a safe place to which access is restricted to individuals who
“need to know” that information in the necessary course of business.
Code names should be used as required.

 Confidential matters should not be discussed in places where it is

reasonable to expect that the discussion may be overheard, such as
elevators, hallways, restaurants, airplanes or taxis.
 Confidential documents should not be read or displayed in
public places and should not be discarded where others can
retrieve them.

 Employees must ensure they maintain the confidentiality of

information in their possession outside of the office as well as
inside the office.

 Transmission of documents by electronic means, such as by

fax, email or directly from one computer to another, should be
made only where it is reasonable to believe that the
transmission can be made and received under secure
conditions.
 Unnecessary copying of confidential documents should be avoided
and documents containing confidential information should be
promptly removed from conference rooms and work areas after
meetings have concluded. Extra copies of confidential documents
should be shredded or otherwise destroyed.

 Access to confidential electronic data should be restricted through the

use of passwords.
 Regulatory compliance is an organization's adherence to laws, regulations,
guidelines and specifications relevant to its business processes. Violations
of regulatory compliance often result in legal punishment, including federal
fines.

Why is regulatory compliance important?

As the number of rules has increased since the turn of the century,
regulatory compliance management has become more prominent in a
variety of organizations. The development has led to the creation of
corporate, chief and regulatory compliance officer and compliance
manager positions. A primary job function of these roles is to hire
employees whose sole focus is to ensure the organization conforms to
stringent, complex legal mandates and applicable laws.
 Typical steps to achieve regulatory compliance include the
following:

 Identify applicable regulations. Determine which laws and

compliance regulations apply to the company's industry and
operations. These include federal, state and municipal rules.

 Determine requirements. Identify the requirements in each

regulation that are relevant to the organization, and consider
plans on how to implement these mandates.
 Document compliance processes. Clearly document
compliance processes, with specific instructions for each
role involved in maintaining compliance. This information
will be useful during regulatory audits.

 Monitor changes, and determine whether they

apply. Compliance requirements are updated constantly.
Changes must be monitored to determine if they are
relevant to the company. If they are, implement updated
procedures, and train the appropriate staff on these updates.
 Board of Directors Regulation

 The purpose of this regulation, the latest version of which was

adopted on February 21 2018, is to specify the principles for actions
of the board of directors, the basic rules of its organisation and
functioning and the rules of conduct for its members.

 The regulation seeks to achieve the greatest transparency,

effectiveness, motivation, supervision and control regarding the
board's functions of management and representation of the corporate
interests, in accordance with the principles and recommendations
regarding corporate governance of listed companies.
Regulations of the Audit and Compliance Committee
 These regulations, approved on 14 December 2017, set out the
Committee's competences and the principles underlying its actions, as well
as the basic rules governing its organization and functioning.

Internal Rules of Conduct in the Securities Market

 The management and control of inside information

 The transparent disclosure of inside information

 The execution and reporting by covered persons of transactions in

securities of the Company and its Group
 Transactions in own shares.

 These rules have been established in order to safeguard the interests of

investors in the securities of the Company.
 The Sarbanes-Oxley Act - Congress passed the Sarbanes-Oxley
Act in 2002 in response to public outrage over the corporate
scandals that rocked the nation at the time. The overall intent of
Sarbanes-Oxley, or SOX, was to protect investors and to make it
harder for corporations to get away with financial fraud.

 Mistreating Employees and Other Workers - Many examples exist

of unethical corporate conduct toward employees or other workers
in the supply chain.
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