1 GOOD GOVERNANCE2 OECB PRINCIPLES

GOOD GOVERNANCE

Good governance is an indeterminate term used in international development literature to describe how public institutions conduct public affairs and manage public resources

Governance is the process of decision-making and the process by which decisions are implemented (or not implemented)

BAD GOVERNANCE

OECB PRINCIPLES

Organization for

Economic

Cooperation and Development

INTRODUCTION

bull The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy OECD countries are democratic countries that support free market economies

bull Originally developed by the OECD in 1999 then updated in 2004 the 2015 revision of the Principles of Corporate Governance addresses these and other emerging issues that are increasingly relevant

PRINCIPLE 1bull Market integrity and the incentives it creates

for market participants as well as for the promotion of transparent and efficient markets

bull The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law transparent and enforceable

bull They should clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

GOOD GOVERNANCE

Good governance is an indeterminate term used in international development literature to describe how public institutions conduct public affairs and manage public resources

Governance is the process of decision-making and the process by which decisions are implemented (or not implemented)

BAD GOVERNANCE

OECB PRINCIPLES

Organization for

Economic

Cooperation and Development

INTRODUCTION

bull The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy OECD countries are democratic countries that support free market economies

bull Originally developed by the OECD in 1999 then updated in 2004 the 2015 revision of the Principles of Corporate Governance addresses these and other emerging issues that are increasingly relevant

PRINCIPLE 1bull Market integrity and the incentives it creates

for market participants as well as for the promotion of transparent and efficient markets

bull The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law transparent and enforceable

bull They should clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

BAD GOVERNANCE

OECB PRINCIPLES

Organization for

Economic

Cooperation and Development

INTRODUCTION

bull The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy OECD countries are democratic countries that support free market economies

bull Originally developed by the OECD in 1999 then updated in 2004 the 2015 revision of the Principles of Corporate Governance addresses these and other emerging issues that are increasingly relevant

PRINCIPLE 1bull Market integrity and the incentives it creates

for market participants as well as for the promotion of transparent and efficient markets

bull The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law transparent and enforceable

bull They should clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

OECB PRINCIPLES

Organization for

Economic

Cooperation and Development

INTRODUCTION

bull The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy OECD countries are democratic countries that support free market economies

bull Originally developed by the OECD in 1999 then updated in 2004 the 2015 revision of the Principles of Corporate Governance addresses these and other emerging issues that are increasingly relevant

PRINCIPLE 1bull Market integrity and the incentives it creates

for market participants as well as for the promotion of transparent and efficient markets

bull The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law transparent and enforceable

bull They should clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

INTRODUCTION

bull The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy OECD countries are democratic countries that support free market economies

bull Originally developed by the OECD in 1999 then updated in 2004 the 2015 revision of the Principles of Corporate Governance addresses these and other emerging issues that are increasingly relevant

PRINCIPLE 1bull Market integrity and the incentives it creates

for market participants as well as for the promotion of transparent and efficient markets

bull The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law transparent and enforceable

bull They should clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

PRINCIPLE 1bull Market integrity and the incentives it creates

for market participants as well as for the promotion of transparent and efficient markets

bull The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law transparent and enforceable

bull They should clearly articulate the division of responsibilities among different supervisory regulatory and enforcement authorities

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P 2 SHARE HOLDERSrsquo RIGHTS

(i) Secure methods of ownership registration(ii) Convey or transfer shares (iii) Obtain relevant and material information on

the corporation on a timely and regular basis (iv) Participate and vote in general shareholder

meetings(v) Elect and remove members of the board and (vi) Share in the profits of the corporation

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P3 Capital structures and arrangements

bull shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed

bull control in the capital markets and extraordinary transactions

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P4 SAME SERIES OF A CLASS

bull All shareholders of the same series of a class including minority and foreign shareholders should be treated equally Within any series of a class all shares should carry the same rights

P5 Insider trading and abusive self-dealing should be prohibited

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P6 RIGHTS OF STAKEHOLDERS

bull Established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth jobs and the sustainability of financially sound enterprises

P7 Performance-enhancing mechanisms for employee participation should be

permitted to develop

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P8POLICIES amp STANDARDS

bull The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation including the financial situation operating results objectives performance ownership remuneration policy and governance of the company

bull Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P9 AUDITbull An annual audit should be conducted by an

independent competent and qualified auditor in order to provide an external and objective assurance to the board and shareholders such that the financial statements fairly represent the financial position and performance of the company in all material respects

bull External auditors should be accountable to the shareholders and owe a duty to the company to exercise due professional care in the conduct of the audit

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

P10 STRATEGYbull The corporate governance framework should ensure

the strategic guidance of the company the effective monitoring of management by the board and the boards accountability to the company and its shareholders That is the Board members should act on a fully informed basis in good faith with due diligence and care and in the best interest of the company and the shareholders It should review and guide corporate strategy major plans of action risk policy annual budgets business plans performance objectives etc as well as monitor the effectiveness of companys governance practices and make changes wherever needed

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

REFERENCES

httpwwwarchiveindiagovinbusinesscorporate_governanceoecd_principlesphp

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

Sarbanes-Oxley Act

bull The Sarbanes-Oxley Act came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice It is named after Senator Paul Sarbanes and Representative Michael Oxley who were its main architects and it set a number of non-negotiable deadlines for compliance

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

Major elements

bull Public Company Accounting Oversight Board

bull Auditor Independencebull Corporate Responsibilitybull Enhanced Financial

Disclosuresbull Analyst Conflicts of Interestbull Commission Resources and

Authority

bull Studies and Reportsbull Corporate and Criminal

Fraud Accountabilitybull White Collar Crime bull Penalty Enhancementbull Corporate Tax Returnsbull Corporate Fraud

Accountability

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

references

httpsenwikipediaorgwikiSarbanesE28093Oxley_Act

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

SEBI INITIATIVES

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

Securities and Exchange Board of India

1048766The Government of Indias securities watchdog the Securities Board of India announced strict corporate governance norms for publicly listed companies in India

1048766The Indian Economy was liberalised in 1991 In order to achieve the full potential of liberalisation and enable the Indian Stock Market to attract huge investments from foreign institutional investors (FIIs) it was necessary to introduce a series of stock market reforms

1048766SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development and regulation of the market

ॐ 21

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

ॐ 22

SEBI

bullOn April 12 1988 the Securities and Exchange Board of India (SEBI)was established with a dual objective of protecting the rights of small investors and regulating and developing the stock markets in IndiabullIn 1992 the Bombay Stock Exchange (BSE)the leading stock exchange in India witnessed the first major scam masterminded by Harshad MehtabullAnalysts unanimously felt that if more powers had been given to SEBIthe scam would not have happenedbullAs a result the Government of India (GoI) brought in a separate legislation by the name of lsquoSEBI Act 1992rsquoand conferred statutory powers to itbullSince then SEBI had introduced several stock market reforms These reforms significantly transformed the face of Indian Stock Markets

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

ॐ 23

SEBI and Clause 49

bullSEBI asked Indian firms above a certain size to implement Clause 49 a regulation that strengthens the role of independent directors serving on corporate boards

bullOn August 26 2003 SEBI announced an amended Clause 49 of the listing agreement which every public company listed on an Indian stock exchange is required to sign The amended clauses come into immediate effect for companies seeking a new listing

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

ॐ 24

The major changes to Clause 49hellip1Independent Directors mdash13 to frac12depending whether the chairman of the board is a non-executive or executive position

2Non-Executive Directors ----The total term of office of non-executive directors is now limited to three terms of three yearseach

3Board of Directors-----The board is required to frame a code of conduct for all board members and senior management and each of them have to annually affirm compliance with the code

4Audit Committee----Financial statements and the draft auditreport reports of management discussion and analysis of financial condition and result of operationsreports of compliance with laws and risk managementmanagement letters and letters of weaknesses in internal controlsissued bystatutory and internal auditorsappointment removal and terms of remuneration of the chief internal auditor

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25

ॐ 25

Clause 495Whistleblower Policy ----This policy has to be communicated to all employees and whistleblowers should be protected from unfair treatment and termination

6Subsidiary Companies-----50 non-executive directors amp 13 amp frac12independent directors depending on whether the chairman is non-executive or executive

7Disclosures----Contingent liabilitiesBasis of related party transactionsRisk management Proceeds from initial public offering Remuneration of directors

8Certifications----reviewed the necessary financial statements anddirectorsrsquoreport established and maintained internal controlsdisclosed to the auditors andinformedthe auditors and audit committee of any significant changes in internal control andor of accounting policies during the year

• 1 GOOD GOVERNANCE 2 OECB PRINCIPLES
• GOOD GOVERNANCE
• Slide 3
• Slide 4
• BAD GOVERNANCE
• OECB PRINCIPLES
• INTRODUCTION
• PRINCIPLE 1
• P 2 SHARE HOLDERSrsquo RIGHTS
• P3 Capital structures and arrangements
• P4 SAME SERIES OF A CLASS
• P6 RIGHTS OF STAKEHOLDERS
• P8POLICIES amp STANDARDS
• P9 AUDIT
• P10 STRATEGY
• REFERENCES
• Sarbanes-Oxley Act
• Major elements
• references
• SEBI INITIATIVES
• Slide 21
• Slide 22
• Slide 23
• Slide 24
• Slide 25