Corporate Governance and code of Conduct in India

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What is corporate governance?

Corporate Governance is nothing but a step towards strengthening of the organization so as to face the challenges It is stepping into the shoes of the shareholders, stakeholders, vendors, suppliers & employees by the Top Managers and CEO of the company Process and mechanisms by which the capital market monitors the actions of corporate management

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The primary purpose of corporate governance is to create wealth legally and ethically. This translates to bringing a high level satisfaction to five constituencies customers, employee, investors, vendors and society at large. The main thing behind any corporate body is to ensure predictability, sustainability and profitability of revenues year after year.

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Difference between Corporate Governance and Corporate Management

Governanc e

CORPORATE GOVERNANCE
External Focus Governance assumes an open system

CORPORATE MANAGEMENT
Internal Focus Management assumes a closed system Task-oriented

Manage ment

Strategy- oriented

Concerned with Concerned with where the company getting the company is going there

Rajkumar Adukia

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Principles in developing Corporate Governance framework. their Transparency : A company is required to transact
business in a manner which is highly transparent and their books of accounts should reflect the same. Accountability: Corporate Governance ensures the accountability of Board of Directors or senior management to the various stake holders within and outside the company. Control : To protect the interest of the share holders the Apex monitoring body i.e. SEBI exercise control over the management of company through various compliances. Trusteeship : Board of directors must act as the trustees of the stakeholders and Good Corporate Governance ensures the same. Ethics: Good ethical practices are the mainstay of any successful corporate governance and ensures fairness in all its 8/20/12 activities.

Objectives behind Corporate Governance

A properly structured Board. The Board is balanced with adequate number of independent and non-executive members to protect the stakeholders. The board adopts transparent procedures and practices and arrives at decisions on the strength of adequate information. The board has an effective machinery to serve the concerns of stakeholders. The board keeps the shareholders informed of relevant developments impacting the company. The board effectively and regularly monitors the functioning of the management team. The board remains in effective control of the affairs of the company at all times.

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Corporate Responsibilities
Political Responsibilities: abiding by legitimate law; respect for the system of rights and the principles of constitutional state. Social Responsibilities: the corporate ethical responsibilities. Economic Responsibilities: maximizing shareholders value.

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Main constituents of Corporate Governance:

Role and powers of Board Legislation Code of Conduct Board Independence Board Skills Management Environment Board Appointments Board Induction and Training Board Meetings and Strategy Setting Financial and Operational Reporting Monitoring the Board Performance Audit Committee Risk Management

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Code of Conduct
A code of conduct is a set of rules outlining the responsibilities of or proper practices for an individual, party or organization. The following are the code followed by most companies in India:Honest and Ethical Conduct: Senior Officers are expected to comply with all applicable laws, rules and regulations and all applicable policies and procedures adopted by the Company with the highest standard of personal and professional integrity, honesty and ethical conduct. Confidential Information: Senior Officers have to secure, preserve, safeguard and use discreetly, confidential information in the best interest of the Company. They should not divulge or communicate such information to third parties except when authorized for the business reasons. 8/20/12

Related Parties: Senior Officers should avoid conducting company business in any significant way with a relative (as defined in the Companies Act, 1956), or with a business in which a close relative is associated, without intimation to the Board of Directors. Exclusivity: Senior Officers are expected to devote their full attention with integrity and honesty to the business interests of the Company. They are prohibited from engaging in any activity that interferes with his proper discharge of responsibilities of the Company, or is in conflict with or prejudicial to the interests of the Company. Gratuities and Gifts: The Companys policy prohibits the receipt of gifts and gratuities, particularly from individuals or firms with which the Company has business dealings. The only exception is the receipt of complementary items that carry Companys name printed or embossed on it so as to clearly establish that it is a sales promotional item. To the extent possible all such gifts or hospitalities must be declined so as to ensure that Senior Officers 8/20/12 put in an obligatory position vis--vis the company are not

Protection and Proper Use of Company's Assets: Senior Officers are responsible for effective control and appropriate use of all Companys resources entrusted to them in the official discharge of their duty. Company's assets should be used only for legitimate business purposes. Insider Trading: Senior Officers should abide by companys insider trading policy in compliance with the SEBI (Prohibition of Insider Trading) Regulations 1992, as adopted by the Board of Directors of the Company. Anti Harassment Policy: The Senior Officers should adhere to and facilitate effective functioning of the Companys mechanism for redressal of complaints of harassment of any nature as per laid down policies and principles. Compliance with the Code: Any Senior Officer who knows or suspect violation of applicable laws, rules or regulations or this Code of Conduct, must immediately report such information to the HR Department. This will help safeguard companys assets and reputation The Board of Directors of the Company shall designate appropriate 8/20/12 person to determine appropriate action incase of violation of the Code.

Any Questions.?

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Thank you
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