Professional Documents
Culture Documents
Scheme of Presentation
1.
2.
3.
Sector
4.
5. 6.
Corporate Governance?
Corporate Governance involves a set of relationships between a companys management, its board, its shareholders and other stakeholders. (OECD Principles Define Corporate Governance Comprehensively, 2004)
Accountability
Fairness Transparency Responsibility & integrity Efficiency and effectiveness
Now greater demand for: Openness and accountability in government, with Greater willingness to challenge decisions Stakeholders Participation
code etc.
Corruption & Nepotism is rampant Inadequate level of remuneration Flawed structure : Secretaries / Ministers / Public
Corporate failures: weak management boards over powerful chief executives weak internal controls
Board Committees
Qualification of CFO and Company Secretary Directors Report Conflict of Interest Remuneration of Board Self Evaluation
on the boards
Ensuring continuity in the tenure of board members, Separating the roles of chairman and chief executive,
Forming specialized board committees, undertaking training and capacity building of the board members,
Augmenting the disclosure and transparency requirements, Undertaking periodic performance evaluation of the board
members,
Definitions:
Compositio
n of the Board
Directors.
Appointing authority / govt and other
Board
shareholders, shall apply fit and proper criteria, in making nominations for election as Board members Annual evaluation of the Boards performance. Chairman will take leadership of the process. Policy formulation and oversight and not the approval of individual transactions unless they are of an extraordinary nature or involve materially large amounts
Separation
Separation of Chairman and CEO Chairman from Independent Directors Responsibilities of Chairman
Leadership of the Board & ensuring its efficient &
effective working, setting its agenda Ensuring all directors are enabled and encouraged to fully participate in the deliberations and decisions of the Board. Should not be involved in day to day operations
Management under the oversight of the Board. Implementation of strategies and policies approved by
the Board Making appropriate arrangements to ensure that funds and resources are properly safeguarded and used economically, efficiently and effectively in accordance with any statutory obligations.
fiduciary duties with a sense of objective Directors to judgment in the best interest of the company. Act in the This provision shall apply to all directors, best interest including ex-officio directors. of the A director, once appointed / elected, shall hold Company office for a period of three years in accordance (and not for with the provisions of the Ordinance, unless he their resigns or is removed in accordance with the nominating provisions of the Ordinance. organizations ) Removal of a director should only take place, in the event of misconduct or substandard Security of performance determined through a performance tenure in line evaluation. with law Provisions Ensure that: apply to exofficio Obligations to all shareholders are fulfilled and directors as they are duly informed in a timely manner of all well material events through shareholder meetings and other communications. Establish sound system of internal control
Boards
executive and all employees, articulates acceptable and unacceptable behavior. Communication throughout the company including posting on the website. Adequate controls for the identification and redressal of grievances arising from unethical practices. Nominate a committee, a Board member or senior Executive for investigating, where necessary, on a confidential basis, any deviation from the companys code of ethics
Conflict
interest to undermine their objectivity and they do not use their position to further their personal interest. Where actual or potential conflict of interest exists, there should be appropriate identification, disclosure and management. A register of interests, which shall be publicly available. Board shall develop and implement a policy on anti-corruption to minimize actual or perceived corruption in the company.
Comprehensive requirements on related party
Power of
Appointme nt of CEO must be exercised by the Board Policies on Corporate Social Responsibil ity & Expenditur e on GoP directives
Board shall exercise its power of: Appointment, development and succession of the Chief Executive officer using fit & proper criteria and other members of senior management.
Annual
by the Board. Annual report including annual financial statements be placed on the website. Monthly accounts, whether audited or otherwise, for circulation amongst the Board members.
Courses
one Orientation Course per year Encouraged to have certification under an appropriate director training/education program offered by any institution, local or foreign. From June 30, 2012 to June 30, 2016 every year minimum one director shall acquire the said certification
Formation
of Board Committee s
Audit Committee, Risk Management Committee (for financial sector), HR Committee & procurement committee. Chaired by non-executive directors and the majority of their members should be independent. Written terms of reference that define their duties, authority and composition. Carry out their performance evaluation on annual basis and submit such assessment to the board. Chairman of the board shall take leadership role in ensuring completion of such evaluation process.
Company Secretary
conditions of the CFO, the company secretary and the CIA shall be determined with the approval of the Board. Can not be removed without Board Approval.
CFO & Company Secretary to attend all board
are followed, and that all applicable statutes and regulations and other relevant statements of best practice are complied with.
fixing the remuneration packages of individual directors. No director shall be involved in deciding his own Directors remuneration. Remuneration Remuneration packages shall encourage value creation, and shall align their interest with the PSE. Require prior approval of shareholders. Sufficient to attract and retain directors needed to run the company successfully.
Shall not be at a level perceived to
compromise their independence. Annual report shall contain criteria and details of Remuneration of each director, including salary, benefits and performance linked incentives.
3.
obligations.
Mixed Board Independent directors: un-conflicted but uniformed Inside directors: conflicted but informed Best board might combine the two What else matters? Strengthening the process of selection and appointment of the BODs through structured and skill-based nomination process, transparent and based on merit. Establishing clear terms of reference for Board Sub-committee (Audit/Fiscal board in Brazil) Eliminating conflicts of interest Prioritizing the issues that need the attention of the Board to focus on items of material nature. Incentives (share ownership) Length of service might matter
Qualification
Qualification of CFO and Company Secretary
Member of ICMAP or ICAP but still opportunity
Recommendation
Strengthening the process of selection and appointment of
BoDs, through structured and skill-based process, transparent and based on merit. Sectoral Specialist
Establishing
nomination
Committees
Eliminating conflicts of interest thru declaration and external
audit
Prioritizing the issues that need the attention of the Board to
Recommendation
Performance Contract between BoD and GoP
Sector Entities
Mandatory Third Party Corporate Governance Audit
balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interest of individuals, corporations and society.
The foundation of any structure of corporate
governance is disclosure. Openness is the basis of public confidence in the corporate system and funds will flow to centers of economic activity that inspire trust. -Sir Adrian Cadbury.
are personally liable? Board members are wholly internal/external? Board members are subject to formal/informal ministerial direction/influence in terms of appointment, decision-making, & dismissal? Board members have other/ministerial roles? Board members have little/much control over their Secretary/CEO/MD? Board members are/arent answerable directly to the Secretary/CEO/MD?