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Corporate Governace in Infosys
Corporate Governace in Infosys
Corporate Governace in Infosys
CHAPTER NO 1. INTRODUCTION
1.1 Back-Ground
Corporate governance has succeeded in attracting a good deal of public
interest because of its apparent importance for the economic health of
corporations and society in general. However, the concept of corporate
governance is poorly defined because it potentially covers a large number of
distinct economic phenomenon. As a result different people have come up with
different definitions that basically reflect their special interest in the field. It is
hard to see that this 'disorder' will be any different in the future so the best way to
define the concept is perhaps to list a few of the different definitions rather than
just mentioning one definition.
Indian Model of Governance
The Indian corporates are governed by the Companys Act of 1956 that follows
more or less the UK model. The pattern of private companies is mostly that of
closely held or dominated by a founder, his family and associates
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Meaning
Corporate Governance refers to the way a corporation is governed. It is the
technique by which companies are directed and managed. It means carrying the
business as per the stakeholders desires. It is actually conducted by the board of
Directors and the concerned committees for the companys stakeholders benefit.
It is all about balancing individual and societal goals, as well as, economic and
social goals.
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Corporate
Governance
is
the
interaction
between
various
participants
Definitions
1.
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governance
is
about
promoting
corporate
fairness,
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To Get A Knowledge
To Increase a Knowledge
The help full to the economy
And also profitable to indian country
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information.
Data obtain to various sources observation are made and accordingly
conclusion is derived
This study is base on the information available for the time period etc.
GOVERNACE
Chapter No 2. Need, Committee
Governance
Chapter No 3. About Infosys
Chapter No 4. Corporate Governance In Infosys
Chapter No 5. Articales On Corporate Governance In Infosys
Chapter No 6. Oecd Principles On Corporate Governance
Chapter No 7. Recent Policy Steps Taken By Sebi For Ensuring Better
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OF
CORPORATE
GOVERNANCE
2.1 Need For Corporate Governance In India
A corporation is a congregation of various stakeholders, namely customers,
employees, investors, vendor partners, government and society. In this changed
scenario an Indian corporation, as also a corporation elsewhere, should be fair and
transparent to its stakeholders in all its transactions. This has become imperative
in todays globalized business world where corporations need to access global
pools of capital, need to attract and retain the best human capital from various
parts of the world, need to partner with vendors on mega collaborations and need
to live in harmony with the community. Unless a corporation embraces and
demonstrates ethical conduct, it will not be able to succeed. Corporations need to
recognize that their growth requires the cooperation of all the stakeholders; and
such cooperation is enhanced by the corporations adhering to the best Corporate
Governance practices. In this regard, the management needs to act as trustees of
the shareholders at large and prevent asymmetry of benefits between various
sections of shareholders, especially between the owner-managers and the rest of
the shareholders.
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The main mechanisms for understanding corporate governance are the following:
1. The market for corporate control (i.e. a hostile takeover market and the market
for partial control).
2. Large shareholder and creditor monitoring.
3.Internal
control
mechanisms,
i.e.
the
board
of
directors, non-
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The remuneration packages are intended to align the interests of Director and
Shareholders by linking cash and share incentives to performance.
However, some argue that the increase in share price was also associated with a
decline in the value of the firms outstanding debt. And corporate performance
cannot be reliably increased simply by adding outsiders to the board of directors
or by increasing the CEOs stockholdings.
Parmalat- a world leader in the dairy food business, entered bankruptcy protection
in 2003 when investors least expected it. How the Italian group so much praised
siphoned away billions of euros without its shareholders, nor its top managers
suspecting it?
One of the problem at Parmalat was due to its ownership and control structuresThere was a limited presence of shareholders and mainly linked by family ties.
Parmala was a holding company with all the other companies within the group
controlled by the Tanzani family. The family had the majority if not all of the
voting rights. As this happens, other shareholders had limited control over the
activities of the group-hence limited power to block any decisions. Managers had
also limited power to influence decisions taken by the family shareholders.
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In that case, the family managed to siphoned away almost millions of euros to
other companies owned by the family. In summary, the demise of Parmalat was a
failure to fully implement the corporate governance mechanisms listed above.
*Statutory auditors Some thought that the Parmalat case was country-specific,
however, Enron the giant American Energy failed victim to corporate governance
problems with the help of Arthur Andersen-the US accounting firm.
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5. SEBI appointed Narayan Murthy Committee in 2002. Its report mainly focuses
on and makes mandatory recommendations regarding responsibilities of audit
committee, quality of financial disclosure, requiring
disclose business risks in the +companys annual reports.
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3.2 History
Established in 1981, Infosys is a NYSE listed global consulting and IT services
company with more than 158,000 employees. From a capital of US$ 250, we have
grown to become a US$ 8.095 billion (LTM Q3 FY14 revenues) company with a
market capitalization of approximately US$ 33 billion.
In our journey of over 30 years, we have catalyzed some of the major changes that
have led to India's emergence as the global destination for software services
talent. We pioneered the Global Delivery Model and became the first IT company
from India to be listed on NASDAQ. Our employee stock options program
created some of India's first salaried millionaires.
Read more about the defining moments in the history of Infosys.
Milestones
2014
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2013
Infosys Edge wins the NASSCOM Business Innovation Award for 2013
2012
2011
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2010
2009
Infosys opens its first development center in Brazil and second Latin
American development center in Monterrey, Mexico
2008
2007
2006
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2005
2004
2003
2002
Nandan M. Nilekani takes over as CEO from N.R. Narayana Murthy, who
is appointed Chairman and Chief Mentor
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2001
2000
1999
Infosys becomes the 21st company in the world to achieve a CMM Level
5 certification
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1998
1997
1996
1995
1994
1993
Goes public
1987
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1983
1981
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helping save lives bringing down time to diagnosis and treatment. We were
among the first to make large-scale use of light-weight advanced composites
(instead of metal) to design lighter planes for our client. These airplanes that
burn 25% less engine fuel now lead the next generation of commercial aircrafts.
Our cloud-based solution is enabling cars, the world over, to communicate with
each other and with other devices, in readiness for a world navigated by thinking,
talking, and intelligent automobiles.
There are so many ways in which Infosys is working on tomorrow.
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Satisfying the spirit of the law and not just the letter of the law
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Complying with the laws in all the countries in which the Company
operates
Management is the trustee of the shareholders' capital and not the owner
When in doubt, disclose
Board composition
At the core of our corporate governance practice is the Board, which oversees
how the management serves and protects the long-term interests of all our
stakeholders. The majority of our Board, nine out of 16, are independent
members. As active and well informed of the board, they are fully committed to
ensuring the highest standards of corporate governance. In addition, the
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Corporate
Governance
Guidelines
2000,
and
the
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CHAPTER
NO
5.
ARTICALES
ON
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A new report has raised serious questions on the corporate governance standards
at Infosys, saying board independence at India's second-largest information
technology (IT) services firm might be the weakest among Tier-I entities.
The report, published by brokerage firm Ambit Capital Research, also says the
promoters hold disproportionately high board representation with respect to their
total
shareholding
in
the
Bangalore-based
company.
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Financial Technologies (FT) as 'ugly', these at Rolta India and MCX have been
categorised as 'bad'. Tech Mahindra/Satyam, Infosys and KPIT Technologies have
been
classified
as
'not
so
good'.
"While some of these companies (such as FT, Educomp and Geodesic) are already
understood by the market for what they are, others (such as Rolta, MCX, Infosys,
Tech Mahindra and KPIT) are yet to be discounted appropriately by
investors,"itsaid.
When contacted, Infosys said it did not want to comment on the report. While FT
also declined comment, Tech Mahindra said the company had not seen the report
and so was unable to respond. A senior Educomp official said: "We completely
reject the opinion put out in this report, that too on an accounting practice the
company discontinued a little more than two years ago. We will go through this
report and take necessary action against what seems to be an ill-researched and
motivated
piece
to
mislead
investors."
A spokesperson for Rolta India said Ambit's was not the correct assessment. "We
have revalued all assets and, in fact, adopted a more conservative policy," he said.
Emails sent to other companies had not elicited any response till the time of going
to press.While talking about Infosys, the report says the company has been
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assistant.
This
was
accommodated
by
the
board.
The Ambit report says the entry of Murthy, as well as his son, amounts to breach
of corporate policies. "Infosys has historically followed a well-articulated policy
of executive retirement at the age of 60,
with Murthy himself being a strong
proponent of the policy. Similarly, all
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the founders have time and again mentioned about not letting a family manage the
business. More surprising was Rohan Murty's entry into Infosys as the senior
Murthy's
executive
assistant."
Infosys is known for introducing some of the global best corporate governance
practices, including giving quarterly (it has discontinued the practice now) and
annual revenue growth guidance, among other things. The Ambit report, however,
says Infosys has lately been following a peculiar guidance pattern, which is
leading to extreme volatility.
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OECD steering committee on corporate governance reviews the principles and its
compliance by member and non-member countries by conducting regular
thematic peer review of member and non-member countries.
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The introspection that followed the Satyam episode has resulted in some major
changes in Indian corporate governance regime. Some of the recent steps taken in
this regard are as follows:
Peer review:
In the light of developments with respect to Satyam SEBI
carried out a peer review exercise of the working papers (relating to financial
statements of listed entities) of auditors in respect of the companies constituting
the NSE Nifty 50, the BSE Sensex and some listed companies outside the
Sensex and Nifty chosen on a random basis.
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Disclosures
regarding
agreements
with
the
media
companies:
Maintenance of website:
In order to ensure/enhance public
dissemination of all basic information about the listed entity, listed entities are
mandated to maintain a functional website that contains certain basic information
about them, duly updated for all statutory filings, including agreements entered
into with media companies, if any.
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CHAPTER NO 8. CONCLUSION
Since the late 1990s, significant efforts have been made by the Indian
Parliament, as well as by Indian corporations, to overhaul Indian Corporate
Governance. The current Corporate Governance regime in Indian straddles both
voluntary and mandatory requirements like Voluntary Guidelines by Ministry of
Corporate Affairs. And for listed companies, the vast majority of Clause 49 of the
listing agreements requirements is mandatory.
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