Session 10 Date 1st March, 2013

Board

relies on independent outside directors to monitor management performance.

 Audit

Committee Remuneration Committee Nomination Committee Strategy Committee Risk Management Committee Management committee Finance committee Science committee

 Oversight

of the finance function and

monitoring Relies on the senior financial management and the outside auditors.

qualifies and independent audit committee should be set up by the board of a Company. This would go a long way in enhancing the credibility of the financial disclosures of a Company and promoting transparency

 Minimum

of 3 members ( non executive directors, majority being independent and with at least one director having financial and accounting knowledge) The chairman of the committee should be an independent director. The Chairman should be present at AGM to answer shareholder queries. The Company Secretary should act as the Secretary to the Committee ( the above are mandatory recommendations)

 Committees

are the link between the board and external auditors This committee looks into all the matters raised by external auditors relating to management systems and tries to resolve any obligations that the auditors raise about the published financial accounts

 To

discuss with independent directors any problem that they experience in completing the audit To review the interim and final accounts in toto. To inform the board about the effectiveness of:
Internal controls and quality of financial reporting as

pointed out by independent directors To make recommendations regarding the audit fee, selection and replacement of auditors.

 Reviewing

with management the annual financial statements before submission to the board Reviewing the adequacy of internal audit function, including structure of internal audit department, staffing and seniority of the official heading department, reporting structure, coverage and frequency of internal audit.

 Discussion

with internal auditors of any significant findings and follow- up thereon Reviewing the findings of any internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board

 Discussion

with the external auditors before the audit commences , of the nature and scope of audit . Also post-audit discussion to ascertain any area of concern Reviewing the companys financial and risk management policies Looking into reasons for substantial defaults in the payments to the depositors, debenture holders, shareholder and creditors

 Meet

at least thrice a year One meeting before finalization and one every 6 months Quorum should be either 2 members or 1/3rd of the members of the audit committee whichever is higher and there should be a minimum of two independent directors. ( this is a mandatory recommendation

 To

investigate any activity within its terms of reference To seek information from any employee To obtain outside legal or other professional advice To secure services of outsiders with relevant expertise ( this is a mandatory recommendation)

 Shareholders

are more concerned about the lack of transparency regarding remuneration of directors and top level managers The boards set ups the committee to objectively review the package of the directors and top level mangers

The Board of Directors should decide the remuneration of the non-executive The annual report must contain : - all elements of the remuneration package of all the directors - Details of fixed component and performance linked incentives - Service contracts, notice period, severance fees - Stock option details, if any

( this is a mandatory recommendation)

 It

chalks out remuneration policy ( checks out unreasonable increase in executive compensation. Designs a transparent remuneration policy that can attract and retain directors and top management and motivate them to achieve the long-term goals of the organization.

 To

select the non-executive directors. Generally, it is headed by the chairman and it shortlists and interviews the final candidates.

 Risk

refers to the uncertainty that surrounds future events and outcomes. It is the expression of the likelihood and impact of an event with the potential to influence the achievement of an organization's objectives. Management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues

Risk

 Setting

the tone from the top that systematic and integrated risk management is valuable for understanding uncertainty in decisionmaking and for demonstrating accountability to stakeholders;

determining

the best way to implement the Integrated Risk Management Framework; ensuring that a supportive learning environment exists for risk management, including sensible risk taking and learning from experience;

 ensuring

that risks are prioritized, and that appropriate risk management strategies are in place to respond to identified risks; and ensuring the capacity to report on the performance of the risk management function

 Terms

of reference of management committee include business strategies and policies, M & A proposal, medium and short term plans, approving policies, process and practice relating to HR, Succession planning for senior manager, to name a few.

 Include: Review

of capital structure Distribution policies Financial policies Accounting standards Systems and controls covering accounting treasury Taxation Forex And insurance

 Will

include Review and approving area of research Org structure Policies and process for R and D to name a few

 THANK

YOU!