PROJECT REPORT ON

CORPORATE
GOVERNANCE

Submitted by: SWATI DADHICH

Registration Number: 420687670/08/2009
Scanned by CamScanner
INDEX

S.NO PARTICULARS PAGE

NUMBER
1 PREFACE 3
2 INTROUCTION 4
3 DEFINITION 5
4 NEED AND SCOPE OF CORPORATE GOVRNANCE 7
5 KEY PARTICIPANTS 9
6 ROLE OF CORPORATE GOVRNANCE 11
7 KEY FEATUTRES OF CORPORATE GOVERNANCE IN COMPANIES ACT 2013 12
8 CORPORATE GOVERNANCE REPORT 16
9 SEBI(LODR) REGULATIONS 2015 18
10 FORMAT OF CORPORATE GOVERNANCE 19
 PREFACE
As per the Company Secretary ship Regulations, 1982 an Apprenticeship Trainee is required to
prepare a Project Report in the Final Quarter of his/her training period. The said project report should
be prepared in consultation with the Company Secretary under whom he/she has trained.

Keeping in view this requirement, I have prepared this project report in consultation with my
principal, Mr. Abhishek Agarwal Sir under whom I have trained. The topic chosen by me has had a
significant impact in the current corporate scenario. Noble Laureate Milton Friedman defines
Corporate Governance as “the conduct of business in accordance with shareholders’ desires, which
generally is to make as much money as possible, while conforming to the basic rules of the society
embodied in law and local customs.”

The Project report has been prepared by me after taking into consideration The Need and Importance
of Corporate Governance. Corporate Governance is integral to the Existence of the Company and is
needed to create a corporate culture of Transparency, Accountability and Disclosure. It refers to
compliance with all the moral and ethical values, legal framework and voluntary adopted practices.
This enhances customer satisfaction, shareholder value and wealth. The said project has been
prepared after referring various case laws and real corporate scenarios.

Swati Dadhich
C.S. Apprenticeship Training
 INTRODUCTION

What is 'Corporate Governance?'

Corporate governance is the system of rules, practices and processes by which a company is directed
and controlled. Corporate governance essentially involves balancing the interests of a company's
many stakeholders, such as shareholders, management, customers, suppliers, financiers, government
and the community. Since corporate governance also provides the framework for attaining a
company's objectives, it encompasses practically every sphere of management, from action plans and
internal controls to performance measurement and corporate disclosure.

Emergence of Corporate Governance in India

Corporate Governance is the new golden term coined in the corporate sector in the late 1990’s by the
Industry Association On Confederation of Indian Institute which was the first initiative in India as a
voluntary measure to be adopted by Indian companies. It has outlined a series of voluntary
recommendations to integrate best-in-class practices of corporate governance in listed companies
which touches the four cornerstones of fairness, transparency, accountability and responsibility in
managing the affairs of the company. The second major initiative was taken by Security Exchange of
India (SEBI) as Clause 49 of the Listing Agreement. The third key initiative to effectively introduce
Corporate Governance was taken by Naresh Chandra Committee and Narayana Murthy Committee
who previewed Corporate Governance model working in companies from the viewpoint of
shareholders, investors and other stakeholders of the company. Corporate governance guidelines both
mandated and voluntary have evolved since 1998, due to the sincere efforts of several committees
appointed by the Ministry of Corporate Affairs (MCA) and the SEBI. The real change in the
corporate sector could be felt with the introduction of 2009 Mandatory Corporate Governance
Voluntary Guidelines which has to be comply by companies listed on stock exchange by Clause 49 of
Listing Agreement including mandatory codes to be followed by companies pertaining to board of
directors, audit committees and various disclosures with respect to related party transactions,
whistleblower policies etc. The final assent to Corporate Governance practices in the effective
management of the company can be seen as introduction to new significant provisions introduced in
the Companies Act, 2013 in form of independent directors, women directors on the board, corporate
social responsibility and mandatory compliance of Secretarial Standards issued by Institute of
Company Secretaries of India as per Section 118 of Companies Act, 2013.

Corporate Governance – Meaning and Definitions

Corporate Governance is a multi-faceted subject and difficult to comprehend in a concise definition.
The main theme of corporate governance is to integrate sound management policies in the corporate
framework in such a manner to bring economic efficiency in the organization in order to achieve twin
goals of profit maximization and shareholder welfare. Few comprehensive definitions on Corporate
Governance are discussed below.

Institute of Company Secretaries of India

“Corporate Governance is the application of best Management Practices, Compliance of Laws in true
letter and spirit and adherence to ethical standards for effective management and distribution of
wealth and discharge of social responsibility for sustainable development of all stakeholders.”

Standard and Poor

“Corporate Governance is the way a company is organized and managed to ensure that all financial
stakeholders receive a fair share of the company’s earnings and assets.”

Mathiesen [2002]

“Corporate governance is a field in economics that investigates how to secure/motivate efficient

management of corporations by the use of incentive mechanisms, such as contracts, organizational
designs and legislation. This is often limited to the question of improving financial performance, for
example, how the corporate owners can secure/motivate that the corporate managers will deliver a
competitive rate of return” – www.encycogov.com,

The Cadbury Committee U.K, defined corporate governance as

follows
“It is a system by which companies are directed & controlled”.
Need of Corporate governance
The collapse of international giants like Eronf, Worlcom, Tyco, AOL and financial scams like Satyam
have been big eye-openers in the corporate arena to make realise the company’s management,
ownership and stakeholders the emergent need to comply with Corporate Governance principles in
order to prevent themselves from paying huge corporate criminal liabilities in the future. These huge
corporate giants paid the cost for lack of good corporate governance practices and corrupt policies
adopted by management of these companies and their financial consulting firms

The significance of good corporate governance solutions has widened because of the increasing
conflict between ownership and management disciplines, the non-compliance of financial reporting
by auditors which inflicts heavy losses on investors and lack of fair and transparent culture in the
company which shook’s investor trust in the financial viability of the company and its ethical
standards.

Good Corporate Governance – Corporate solutions

Good corporate governance is embedded to the very existence of a sound company. It is important
for the following reasons:

1. Corporate governance lays down the foundation of a properly structured Board and strives to
a healthy balance between management and ownership which is capable of taking
independent decisions for creating long-term trust between the company and external
stakeholders of the company.
2. It strengthens strategic thinking at the top management by taking independent directors on the
board who bring intellectual experience to the company and unbiased approach to deal with
matters related to company’s welfare.
3. It instills transparent and fair practices in the board management which results in financial
transparency and integrity of the audit reports.
4. It sets the benchmark for the company’s management to comply with laws in true letter and
spirit while adhering to ethical standards of the company for bringing out effective
management solutions in order to discharge its responsibility for smooth functioning of the
company.
5. It instills loyalty among investors as their interest is looked after in the best manner by a
company who adopts good management practices.
Scope of Corporate Governance
Corporate governance instills ethical standards in the company. It creates space for open dialogue by
incorporating transparency and fair play in strategic operations of the corporate management. The
significance of corporate governance lies in:

1. Accountability of Management to shareholders and other stakeholders

2. Transparency in basic operations of the company and integrity in financial reports produced
by the company
3. Component Board comprising of Executive and Independent Directors
4. Checks & balances is an integral part of good corporate governance.
5. Adherence to the rules of company in law and spirit
6. Code of responsibility for Directors and Employees of the company
7. Open Dialogue between management and stakeholders of the company.
8. Investor Loyalty is a guarantor of good corporate governance practices

A Competent board comprising of experienced professionals and active directorship who brings rich
experience and intellectual vision on the board resulting in a greater economic efficiency of the
company and enjoys the indispensable trust of the shareholders and key stakeholders of the company
and they turn into trusted market players in the corporate sector enjoying everlasting market repute.

Key market players involved in corporate governance

The Corporate management decisions have an impact on various people and entities associated with
the company who are collectively known as stakeholders which include shareholders, directors,
creditors, employees, suppliers, government agencies and society at large. But there are only key
stakeholders like shareholders, directors, officers who are active participants in corporate governance
process and other stakeholders who themselves are not involved in corporate governance practices
but rather are recipients of benefits derived from companies having good corporate governance
practices.
The Key Participants are as following
Shareholders

The shareholders are the principal owners of the company who provide capital to the company in lieu
of return received by them in form of dividends on the earnings of the company. The individual
shareholders participate in corporate governance procedures by exercising their voting rights on the
key decisions of the company in in the interest of all stakeholders. The other institutional
shareholders of the company like, insurance companies, trusts, investment banks, etc. who have
greater shareholding than other shareholders actively have a greater role in monitoring corporate
governance activities of the company as they are interested in market viability of the company in
form of large market shares.

Directors

The Board of Directors are key constitute players for formulating and implementing corporate
governance practices in the heart of the company machinery by making key decisions pertaining to
setting long term corporate strategy of the company, sharing high responsibility to run the company
on good governance structure, bringing effective board leadership to tackle the company’s operations
at all levels and monitoring its performance in a fair and transparent manner.

Officers and key managerial personnel

Key Managerial Personnel (KMP) and other officers of the company who serve the top –
management level under the Companies Act, 2013 includes the Chief Executive Officer, Managing
Director or Manager; Whole Time Director; Company Secretary. The Key Managerial Personnel
would advise the Boards to achieve the corporate goals and by adhering to Good Corporate
Governance practices. KMP would also have to report to the Sectoral Regulators for the non-
compliances made by the company.

The new law bestows upon KMP’s a significant role to run the company’s operations in such a
manner by adhering to laws in true letter and spirit in order to spell out the will of directors
and other stakeholders effectively and efficiently in achieving company’s twin objective of
profit maximization and maximization of wealth.
Role of Corporate Governance in banks
Bank and Financial Institutions are the backbones of the economic and financial system of any
country. Banks are the richest source of economic wealth of the company any nation’s progress report
is depicted through healthy and sound functioning of the banking system of the country.

To strengthen the banking practices in India, RBI plays a leading role in formulating and
implementing corporate governance norms for banking regime in India sector. Banking structure is
the lifeblood of an economy to survive in this globalized scenario.

• The chapter on Corporate Governance in Banks in India elaborately discusses the role of
• RBI in regulating good corporate governance practices in banking sector in India.

Role of proxy advisory firms in Corporate Governance

Proxy advisory firms is a very nascent terminology introduced in the corporate world which are
basically independent research centers that evaluate the performance of corporate matters such as
mergers, acquisitions, top appointments and CEO pay, on which shareholders are expected to vote on
in AGMs, EGMs so that an informed decision can be taken by the shareholders about the corporate
policies undertaken by these companies in order to increase their shareholding value. These firms
engage in comprehensive analysis of the major activities of the company and submit detailed reports
in order to guide the shareholders to take decisions which turn out to be beneficial to shareholders in
the long run for safeguarding their interest with the company.

Proxy advisory firms charge fees from institutional investors and provide independent advisory
services and voting recommendations to the shareholders and other institutional investors.

India has home grown proxy advisory firms such as Institutional Investor Advisory Services (IIAS),
In Govern and Stakeholder Empowerment Services (SES) which provide more analytical,
sophisticated and structured report to shareholding units leading to a change in the governance
structure of the company.

Role of corporate governance in Family Business

The history of Indian Corporate giants includes names like Tata’s, Birla’s, and now presently
Reliance who all are listed public Indian companies enjoying biggest market share in the country are
family promoted and managed companies. Nearly a third of the Sensex companies can be said to be
family promoted, controlled and managed. Research and experience show that family ownership and
control brings positive approach to the family business and its constituent shareholders. However it is
also true and has been seen in many family owned business in India and abroad that these businesses
also
Brings with itself magnitude of problems delineating ownership from family management and
sometimes destroying the whole businesses where power play and conflicts take the first place and
fair play and transparency in takes a back seat in family owned businesses.

Corporate governance is the measuring rod which measures the long-term success of the company
and keeps peace in the family.

Corporate governance regulates the family and business levels of the company and brings good
solutions to family ownership challenges and often results in the long-term success of the family
business and maintains peace and harmony in the controlling family and maintaining fair balance
between family ownership and outside management control.
Key features of corporate governance in Companies Act, 2013
There has been a sea change in companies Act, 2013 which has waived its way from principle of
corporate governance practices as the new key change in the act. The Companies Act, 2013 has taken
a foot forward from SEBI’s Clause 49 of listing agreement by introducing provisions in the
Companies act 2013 which promotes corporate governorship code in such a manner that it will no
longer be restricted to only listed public companies but also unlisted public companies. The new
(Companies Act), 2013 has introduced various key provisions which have changed the corporate
regime in such a way to run the corporate machinery in alignment with the globalised corporate world
by mandatory disclosure requirements for:

Independent Director under the Companies Act, 2013

The strength of number of Independent Directors for the prescribed companies under Section 149(4)
read with Rule 4 of Companies (Appointment and Qualifications of Directors) Rules, 2014 for listed
Public Company is at least one third of total number of directors and public companies having
turnover of 100 crores rupees or more at least 2 directors and public companies having paid up capital
of 10 crores rupees or more at least 2 directors.

Audit Committee

The Audit Committees of the Companies Act, 2013 has undertaken public companies within its ambit
to constitute audit committees. The constitution of audit committee has also seen change as compared
to clause 49 with minimum with three independent directors on the board along with the chairperson
who should be able to read and understand the financial statement.

Section 177 of the Companies Act, 2013 and Rule 6 and 7 of Companies (Meetings of Board and its
Powers) Rules,2014 deals with the Audit Committee.

The Board of directors of every listed company and the following classes of companies, as prescribed
under Rule 6 of Companies (Meetings of Board and its powers) Rules, 2014 shall constitute an Audit
Committee.

1. All public companies with a paid-up capital of Rs.10 Crores or more;

2. All public companies having turnover of Rs.100 Crores or more;
3. All public companies, having in aggregate, outstanding loans or borrowings or debentures or
debentures or deposits exceeding Rs. 50 Crores or more.
Internal Audit

Companies Act, 2013 has mandated the internal audit for certain classes of companies as specified
under Section 138 of the Companies Act, 2013.

Serious Fraud Investigation Offence (SFIO)

Section 211 (1) of the Companies Act, 2013 shall establish an office called the Serious Fraud
Investigation office to investigate fraud relating to Company. The powers are given to SFIO under the
act as mentioned that he can investigate into the affairs of the company or on receipt of report of
Registrar or inspector or in the public interest or request from any Department of Central Government
or State Government.

Corporate Social Responsibility

The concept of CSR rests on the good corporate citizenship where corporate contributions to the
societal growth as a part of their corporate responsibility for utilizing the resources of the society for
their productive use.

Ministry of Corporate Affairs http://www.mca.gov.in/ has recently notified Section 135 and Schedule
VII of the Companies Act as well as the provisions of (CRS Rules) which has come into effect from 1
April 2014.

Applicability

Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a
Company:

1. Net worth of the company to be Rs 500 crore or more;

2. Turnover of the company to be Rs 1000 crore or more;
3. Net profit of the company to be Rs 5 crore or more.

Further, as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies but
also applicable to branch offices of a foreign company in India.
CSR Committee and Policy

Every company as prescribed in Section 135 of the Act and Company (Corporate Responsibility)
Rules, 2014 within the threshold limit requires spending of at least 2% of its average net profit for the
immediately preceding 3 financial years on CSR activities.

Further, the company will be required to constitute a committee (CSR Committee) of the Board of
Directors (Board) consisting of 3 or more directors.

The CSR Committee shall formulate and recommend to the Board, a policy which shall indicate the
activities to be undertaken (CSR Policy); recommend the amount of expenditure to be incurred on the
activities referred and monitor the CSR Policy of the company. The Board shall take into account the
recommendations made by the CSR Committee and approve the CSR Policy of the company.

The new CSR regime is based on “Comply or explain” approach to stringently push big corporate
giants to take initiative towards their duty to contribute towards their CSR activities. Companies
failing to do so would be required to explain why they have not included such information, in the
annual report as under Section 92 of the Companies Act, 2013 as part of “comply or explain”
approach for large companies.

The Companies Act, 2013 empowers independent directors with proper checks and balances so that
such extensive powers are not exercised in an unauthorized manner but in a rational and accountable
way. The changes are a step forward in the right direction to smoothly run the management and
affairs of the companies in the interest of stakeholders. These are all welcome changes in the
globalised corporate world of today and they will strengthen the core corporate machinery by
instilling strong corporate governance norms in a company leading to economic efficiency and higher
ethical standards which will always inspire the company’s management to work in the direction to
uphold its goals of maximization of wealth of stakeholders backed with good corporate repute.
 Corporate Governance Report
The following disclosures shall be made in the section on the corporate governance of the
annual report.

1. A brief statement on listed entity’s philosophy on code of governance.

2. Board of directors:

➢ Composition and category of directors (e.g. promoter, executive, non-executive,

Independent non-executive, nominee director - institution represented and whether as
Lender or as equity investor);
➢Attendance of each director at the meeting of the board of directors and the last
Annual general meeting;
➢Number of other board of directors or committees in which a directors is a
member or chairperson;
➢ Number of meetings of the board of directors held and dates on which held;
➢disclosure of relationships between directors inter-se;
➢number of shares and convertible instruments held by nonexecutive directors;
➢ Web link where details of familiarization programmes imparted to independent
Directors is disclosed.

3. Audit committee:
➢ brief description of terms of reference;
➢ composition, name of members and chairperson;
➢ meetings and attendance during the year.

4. Nomination and Remuneration Committee:

➢ brief description of terms of reference;
➢ composition, name of members and chairperson;
➢ meetings and attendance during the year
➢ performance evaluation criteria for independent directors.
.
5. Remuneration of Directors:
➢ all pecuniary relationship or transactions of the non-executive directors vis-à vis
the listed entity shall be disclosed in the annual report;
➢ criteria of making payments to non-executive directors. Alternatively, this may be
disseminated on the listed entity’s website and reference drawn thereto in the annual
report;
➢ disclosures with respect to remuneration: in addition to disclosures required under the
Companies Act, 2013, the following disclosures shall be made

6. Stakeholders' grievance committee

7. General body meetings
8. Means of communication
9. General shareholder information
10. Other Disclosures.
 SECURITIES AND EXCHANGE BOARD OF INDIA
(LISTING OBLIGATIONS AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2015
Regulation 27(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (“Listing Regulations”), specifies that the listed entity shall
submit quarterly compliance report on corporate governance in the format specified by the Board
from time to time to recognized Stock Exchange(s) within fifteen days from close of the quarter.

Format for compliance report on Corporate Governance to be submitted to Stock Exchange (s) by
Listed Entities are as under:
 Format to be submitted by listed entity on quarterly basis

1. Name of Listed Entity

2. Quarter ending

I. Composition of Board of Directors

Title Name PA Category Date of Te No of Number of No of post of
$
of the N (Chairperson Appoint nur Directorship memberships Chairperson in
(Mr Director & /Executive/N ment in e* in listed in Audit/ Audit/
./ DIN on- the entities Stakeholder Stakeholder
Ms) Executive/in current including this Committee(s) Committee
dependent/
Nominee) term listed entity including this held in listed
/cessati listed entity entities
on (Refer including this
Regulation (Refer listed entity
25(1) of Regulation
Listing 26(1) of (Refer
Regulations) Listing Regulation
Regulations) 26(1) of Listing
Regulations)

$
PAN number of any director would not be displayed on the website of Stock Exchange
&
Category of directors means executive/non-executive/independent/Nominee. If a director fits into
more than one category write all categories separating them with hyphen
* To be filled only for Independent Director. Tenure would mean total period from which Independent
director is serving on Board of directors of the listed entity in continuity without any cooling off period.
II. Composition of Committees
Name of Committee Name of Category
Committee (Chairperson/Executive/Non-
members Executive/independent/Nomin
$
ee)
1. Audit Committee
2. Nomination & Remuneration Committee
3. Risk Management Committee(if applicable)
4. Stakeholders Relationship Committee’
&
Category of directors means executive/non-executive/independent/Nominee. if a director fits into
more than one category write all categories separating them with hyphen
III. Meeting of Board of Directors
Date(s) of Meeting (if Date(s) of Meeting (if any) in the relevant Maximum gap between any
any) in the previous Quarter two consecutive (in number of
quarter days)

IV. Meeting of Committees

Date(s) of meeting of Whether Date(s) of meeting of the Maximum gap between
the committee in the requirement of committee in the any two consecutive
relevant quarter Quorum met previous quarter meetings in number of
(details) days*
*
This information has to be mandatorily be given for audit committee, for rest of the committees
giving this information is optional

V. Related Party Transactions

refer note below
Subject Compliance status (Yes/No/NA)
Whether prior approval of audit committee obtained
Whether shareholder approval obtained for material
RPT
Whether details of RPT entered into pursuant to
omnibus approval have been reviewed by Audit
Committee
Note
1 In the column “Compliance Status”, compliance or non-compliance may be indicated by
Yes/No/N.A.. For example, if the Board has been composed in accordance with the requirements
of Listing Regulations, "Yes" may be indicated. Similarly, in case the Listed Entity has no related
party transactions, the words “N.A.” may be indicated.
2 If status is “No” details of non-compliance may be given here.

VI. Affirmations
1. The composition of Board of Directors is in terms of SEBI (Listing obligations and disclosure
requirements) Regulations, 2015.
2. The composition of the following committees is in terms of SEBI(Listing obligations and
disclosure requirements) Regulations, 2015
a. Audit Committee
b. Nomination & remuneration committee
c. Stakeholders relationship committee
d. Risk management committee (applicable to the top 100 listed entities)
3. The committee members have been made aware of their powers, role and responsibilities as
specified in SEBI (Listing obligations and disclosure requirements) Regulations, 2015.
4. The meetings of the board of directors and the above committees have been conducted in the
manner as specified in SEBI (Listing obligations and disclosure requirements) Regulations, 2015.
5. This report and/or the report submitted in the previous quarter has been placed before Board of
Directors. Any comments/observations/advice of Board of Directors may be mentioned here:

Name & Designation

Company Secretary / Compliance Officer / Managing Director / CEO

Note:

Information at Table I and II above need to be necessarily given in 1st quarter of each
financial year. However if there is no change of information in subsequent quarter(s)
of that financial year, this information may not be given by Listed entity and instead a
statement “same as previous quarter” may be given.
Format to be submitted by listed entity at the end of the financial year (for the whole of
financial year)

I. Disclosure on website in terms of Listing Regulations

Item Compliance status
(Yes/No/NA)refer note below
Details of business
Terms and conditions of appointment of independent directors
Composition of various committees of board of directors
Code of conduct of board of directors and senior management personnel
Details of establishment of vigil mechanism/ Whistle Blower policy
Criteria of making payments to non-executive directors
Policy on dealing with related party transactions
Policy for determining ‘material’ subsidiaries
Details of familiarization programmes imparted to independent directors
Contact information of the designated officials of the listed entity who
are responsible for assisting and handling investor grievances
Email address for grievance redressal and other relevant details
Financial results
Shareholding pattern
Details of agreements entered into with the media companies and/or
their associates
New name and the old name of the listed entity
II Annual Affirmations
Particulars Regulation Number Compliance status
(Yes/No/NA)refer note below
Independent director(s) have been 16(1)(b) & 25(6)
appointed in terms of specified criteria of
‘independence’ and/or ‘eligibility’
Board composition 17(1)
Meeting of Board of directors 17(2)
Review of Compliance Reports 17(3)
Plans for orderly succession for 17(4)
Appointments
Code of Conduct 17(5)
Fees/compensation 17(6)
Minimum Information 17(7)
Compliance Certificate 17(8)
Risk Assessment & Management 17(9)
Performance Evaluation of Independent 17(10)
Directors
Composition of Audit Committee 18(1)
Meeting of Audit Committee 18(2)
Composition of nomination & remuneration 19(1) & (2)
Committee
Composition of Stakeholder Relationship 20(1) & (2)
Committee
Composition and role of risk management 21(1),(2),(3),(4)
Committee
Vigil Mechanism 22
Policy for related party Transaction 23(1),(5),(6),(7) & (8)
Prior or Omnibus approval of Audit 23(2), (3)
Committee for all related party transactions
Approval for material related party 23(4)
Transactions
Composition of Board of Directors of 24(1)
unlisted material Subsidiary
Other Corporate Governance requirements 24(2),(3),(4),(5) & (6)
with respect to subsidiary of listed entity
Maximum Directorship & Tenure 25(1) & (2)
Meeting of independent directors 25(3) & (4)
Familiarization of independent directors 25(7)
Memberships in Committees 26(1)
Affirmation with compliance to code of 26(3)
conduct from members of Board of
Directors and Senior management
Personnel
Disclosure of Shareholding by Non- 26(4)
Executive Directors
Policy with respect to Obligations of 26(2) & 26(5)
directors and senior management

Note

1 In the column “Compliance Status”, compliance or non-compliance may be indicated by

Yes/No/N.A.. For example, if the Board has been composed in accordance with the
requirements of Listing Regulations, "Yes" may be indicated. Similarly, in case the Listed
Entity has no related party transactions, the words “N.A.” may be indicated.
2 If status is “No” details of non-compliance may be given here.
3 If the Listed Entity would like to provide any other information the same may be indicated here.

III Affirmations:

The Listed Entity has approved Material Subsidiary Policy and the Corporate Governance requirements with respect
to subsidiary of Listed Entity have been complied.
 Name & Designation
Company Secretary / Compliance Officer / Managing Director / CEO

Format to be submitted by listed entity at the end of 6 months after end of financial year along-with
second quarter report of next financial year

I Affirmations
refer note below
Broad heading Regulation Number Compliance status (Yes/No/NA)
Copy of the annual report 46(2)
including balance sheet,
profit and loss account,
directors report, corporate
governance report,
business responsibility
report displayed on
website
Presence of Chairperson 18(1)(d)
of Audit Committee at the
Annual General Meeting
Presence of Chairperson 19(3)
of the nomination and
remuneration committee
at the annual general
meeting
Whether “Corporate 34(3) read with Para C
Governance Report” of Schedule V
disclosed in Annual
Report
Note
1. In the column “Compliance Status”, compliance or non-compliance may be indicated by
Yes/No/N.A. For example, if the Board has been composed in accordance with the
requirements of Listing Regulations, "Yes" may be indicated. Similarly, in case the
Listed Entity has no related party transactions, the words “N.A.” may be indicated.
2. If status is “No” details of non-compliance may be given here.

3. 3 If the Listed Entity would like to provide any other information the same may be
indicated here.
RECOMMENDATIONS BY UDAY KOTAK COMMITTEE

A corporate governance committee was formed by the SEBI in June 2017, under the chairmanship of
Uday Kotak, MD, Kotak Mahindra Bank, with a view to enhance the standards of this regime of
listed entities in India.

On October 5, 2017, committee under Uday Kotak's chairmanship along with market regulator SEBI
decided to change the face of corporate governance by introducing norms to safeguard and improve
performance of listed companies' directors and stakeholders.

Uday Kotak, in the report, said, “This report is a sincere attempt to support and enable sustainable
growth of enterprise, while safeguarding interests of various stakeholders. It is an endeavour to
facilitate the true spirit of governance. Under the leadership of a vigilant market regulator -SEBI, and
with the persistent efforts of key stakeholders, corporate governance standards in India will continue
to improve.”

Some of the recommendations made by the aforesaid committee are:

Minimum number of board of directors

The Committee has proposed that now board of directors shall comprise not less than six directors.
Also board of directors shall have an optimum combination of executive and non-executive directors
with at least one woman as an independent director and not less than 50% of the board of directors
shall comprise of non-executive directors.

Minimum number of board meetings

These boards shall meet at least 4-5 times a year, with a maximum time gap of one hundred and
twenty days between any two meetings.

Under this meeting, the board shall specifically discuss strategy, budgets, board evaluation, risk
management, ESG (environment, sustainability and governance) and succession planning.
Listed entity shall, at least once every year, undertake a formal interaction between the non-executive
directors and the senior management.

With effect from April 1, 2018, if a director does not attend at least half of the total number of board
meetings held over the Relevant Period, his/her continuance on the boards hall be subject to
ratification by the shareholders at the next annual general meeting.

While from April 01, 2020, listed entities which have public shareholding 40% or more shall ensure
that the Chairperson of the board shall be a non-executive director, on and from that financial year.

No listed entity shall appoint a person or continue the directorship of any person as a non-executive
director who has attained the age of 75 years unless a special resolution is passed to that effect.
Minimum compensation and remuneration
Top 500 listed entities by market capitalization shall pay compensation to each independent director
as Rs 5 lakh per annum, whether through sitting fees or profit linked commissions.

Provided that, this provision will not apply in case of inadequacy of profits in accordance with
Section 197 of Companies Act, 2013 - minimum sitting fees for every board meeting of Rs 50,000 for
top 100 entities by market capitalisation and Rs 25,000 for next 400 entities.

SEBI stated that annual remuneration payable to such executive director if exceeds Rs 5 crore or
2.5% of the net profits of the listed entity, whichever is higher, the approval of the shareholders under
this provision shall be valid only till expiry of term of such director.
Approval of shareholders shall be obtained every year in which the annual remuneration payable to a
single non-executive director exceeds 50% of the total annual remuneration payable to all non-
executive directors, giving details of the remuneration thereof.
TOP 10 COMPANIES OF INDIA FOR SUSTAINABILITY
AND GOVERNANCE 2017

Rank Name of the Companies

1 Tata Chemicals Ltd.
2 Tata Steel Ltd.
3 Tata Power Company Ltd.
4 Shree Cements Ltd.
5 Tata Motors Ltd.
6 UltraTech Cement Ltd.
7 Mahindra & Mahindra Ltd.
8 ACC Ltd.
9 Ambuja Cements Ltd.
10 ITC Ltd.

Source: https://www.futurescape.in/india-top-companies-for-sustainability-and-csr-2017/
COMMENTS AND REMARKS OF THE PRINCIPAL: NIL