Business Ethics and Corporate Governance

Assignment

Corporate Governance Analysis of

Infosys

Submitted To: Dr. R S Prasad

Prepared By:
Saloni Sharma 120/2023
1. Shareholding Pattern
Share
holdi
ng as T
a% ot
No. of al
of total as
shar no. of a No. of
No. of
Cate es share % equity
No. fully
gory und Total s No. of of shares
of paid
of erlyi no. (calc Votin T held in
share up
shar ng shares ulate g ot demat
holde equity
ehol Dep held d as Rights al erializ
rs shares
der osit per V ed
held
ory SCR oti form
Rec R, ng
eipts 1957) ri
As a gh
% of t
(A+B
+C2)
(A)
Pro
mote
r& 54,86, 54,86, 54,86, 13
54,86,
Pro 25 43,97 43,97 14.78 43,97 .2
43,979
mote 9 9 9 2
r
Grou
p
(B) 28,9 3,14,8 32,7 3,15,1 3,15,1 75 3,14,8
Publ 7,00 4,63,8 3,51 7,37,4 84.92 7,37,4 .9 0,01,3
ic 3 89 7 06 06 4 46
(C1)
Shar
es 43,88, 43,88, 43,88, 10
43,88,
unde 1 16,70 16,70 0.00 16,70 .5
16,704
rlyin 4 4 4 7
g
DRs
(C2)
Shar
es
held
by 1,12,4 1,12,4 1,12,4 0. 1,12,4
1 0.30
Emp 9,465 9,465 9,465 27 9,465
loye
e
Trus
t
(C) 2 45,00, 45,00, 0.00 45,00, 10 45,00,
Non- 66,16 66,16 66,16 .8 66,169
 Pro
mote
r-
9 9 9 4
Non
Publ
ic
Gran
28,9 4,14,7 32,7 4,15,0 4,15,0 10 4,14,6
d 100.0
7,03 1,74,0 3,51 4,47,5 4,47,5 0. 7,11,4
Tota 0
0 37 7 54 54 00 94
l

2. Board of Directors
a. Composition: Executive, Internal and Independent

1. Executive Directors:
o Salil Parekh: Chief Executive Officer and Managing Director.
o Pravin Rao: Chief Operating Officer.

Other executive directors may hold positions related to the company’s management and
operations1.

2. Internal Directors:
o Nandan M. Nilekani: Co-founder and Chairman of the Board.
o Salil Parekh: Chief Executive Officer and Managing
o D. Sundaram: Lead Independent Director.

Other internal directors may include senior managers or functional heads.

3. Independent Directors:
o Michael Gibbs
o Bobby Parikh
o Chitra Nayak
o Govind Iyer
o Helene Auriol Potier
o Nitin Paranjpe

These independent directors provide an objective perspective and ensure transparency

and accountability in the company.

b. Working of the Board:

The Company normally has five regular Board meetings in a year. Independent directors are expected to
attend at least four quarterly Board meetings and the AGM.
 Role of Different Directors in Meetings:

o Executive Directors: They actively participate in discussions, present reports, and

provide insights into operational matters.
o Internal Directors: They contribute their expertise in specific areas (e.g., technology,
finance, HR) during discussions.
o Independent Directors: Their primary role is to ensure good governance. They ask
critical questions, assess risks, and safeguard shareholders’ interests. They also serve on
committees like the Audit Committee, Compensation Committee, etc.
o The Chairman of the Board (Nandan M. Nilekani) leads the meetings, ensures effective
communication, and facilitates decision-making3.

e. Compensation of the Directors and Top Management

1. The remuneration / compensation / commission etc. to be paid to Directors will be determined by the
Committee and recommended to the Board for approval.

2. The remuneration and commission to be paid to the Managing Director/Whole-time Director shall be in
accordance with the provisions of the Act, and the rules made thereunder.

3. Increments to the existing remuneration / compensation structure may be recommended by the

Committee to the Board which should be within the limits approved by the Shareholders in the case of
Managing Director/ Whole-time Director.

4. Insurance premiums for Directors, KMP, and Senior Management are not part of their remuneration,
except if found guilty.

Independent Directors Remuneration:

Infosys non-executive director pay is based on:

 Individual contribution
 Company performance
 Legal requirements

It cannot exceed 1% of company profits and doesn't include stock options for independent directors.

PARTICULARS AMOUNT IN USD

Fixed Pay 150,000
Board/Committee attendance fees 25,000
Non-Executive Chairman 300,000
Chairperson of Audit Committee 50,000
Chairpersons of other committees 30,000
 Members of Audit committee 30,000
Members of other committees 20,000
Travel fee (per meeting) 10,000
Incidental fees (per meeting) 1,000
Lead Independent Director 30,000

f. Board Committees
1. Audit Committee:
o Chairperson: Bobby Parikh
o Members: D. Sundaram, Michael Gibbs

Role:

 Responsible for overseeing financial reporting, internal controls, and risk management.
 Ensures compliance with accounting standards and legal requirements.
 Comprises independent directors who review financial statements and interact with auditors

2. Nomination and Remuneration Committee:

o Chairperson: D. Sundaram
o Members: Michael Gibbs, Govind Iyer

Role:

 Focuses on addressing shareholders’ grievances, including investor complaints.

 Ensures effective communication between the company and its shareholders.
 Aids in maintaining transparency and trust

3. Risk Management Committee:

o Chairperson: D. Sundaram
o Member: Michael Gibbs, Uri Levine , Bobby Parikh , Chitra Nayak , Govind Iyer

Role:

 Identifies, assesses, and manages risks across the organization.

 Ensures risk mitigation strategies are in place.
 Comprises members with expertise in risk management

4. Stakeholder Relationship Committee:

o Chairperson: Michael Gibbs
 o Members: D. Sundaram, Bobby Parikh, Chitra Nayak

Role:

 Focuses on addressing shareholders’ grievances, including investor complaints.

 Ensures effective communication between the company and its shareholders.
 Aids in maintaining transparency and trust

2.Legal Compliance Report (The Companies Act, 2013 and Clause 49)
The corporate governance standards, through periodic evaluation and change, is one of the most
important aspects of ensuring value creation for our stakeholders. Infosys follows the guidelines
established by the Board of the Company. These guidelines provide a structure within which directors and
the Management can effectively pursue the Company’s objectives for the benefit of its stakeholders.
These are framed in conjunction with the Company’s Memorandum & Articles of Association, the
charters of the committees of the Board and applicable laws / regulations / guidelines in force in India, the
US and other jurisdictions, as applicable.

The Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 (“the Listing Regulations”) as amended, define an ‘independent director’ as a person who, including
his / her relatives, is or was not a promoter or employee or key managerial personnel of the company or
its subsidiaries. Further, the person and his / her relatives should not have a material pecuniary
relationship or transactions with the company or its subsidiaries, during the three immediately preceding
financial years or during the current financial year, apart from receiving remuneration as an independent
director

3.Related Party Transaction

Infosys has formulated a policy on materiality of Related Party Transactions (RPT) and dealing with
them.The policy regulates all transactions between the Company and its Related Parties.The Audit
Committee reviews and approves RPTs based on thresholds defined under the Listing Regulations.

The Audit Committee approves all identified RPTs.Material modifications to existing RPTs (within
specified limits) also require approval.The Board or shareholders approve RPTs not in the ordinary course
of business or not at arm’s length price

4. Whistle Blower Policy

Infosys Limited and its subsidiaries are committed to complying with the foreign and domestic laws that
apply to them, satisfying the Company’s Code of Conduct and Ethics, and particularly to assuring that
business is conducted with integrity and that the Company’s financial information is accurate. If potential
violations of Company policies or applicable laws are not recognized and addressed promptly, the
Company and those working for or with the Company could face governmental investigation,
prosecution, fines, and other penalties. That can be costly. Consequentially, and to promote the highest
ethical standards, the Company will maintain a workplace that facilitates the reporting of potential
violations of Company policies and applicable laws. Directors, employees or any other person including
vendors, contractors, subcontractors, consultants, trainees, shareholders, former employees, job applicants
and any other third parties must be able to raise concerns regarding such potential violations easily and
free of any fear of retaliation.

5.Code of Conduct

Infosys' Code of Conduct and Ethics, also known as the C-LIFE Code, outlines the company's
commitment to ethical business practices and defines expectations for employee behavior.

Core Values:

 Client Value (C): Infosys prioritizes exceeding client expectations and fostering long-term
relationships.
 Leadership by Example (L): Leaders are expected to embody the C-LIFE values and set a
positive example for others.
 Integrity and Transparency (I): Honesty, fairness, and openness are essential in all interactions.
 Fairness and Excellence (F & E): Infosys strives to create a fair and inclusive work environment
while upholding the highest standards of quality.

7. Market for External Control

The global IT services industry is projected to continue growing, fueled by the increasing need for digital
transformation solutions ( a domain where Infosys excels). Infosys has reliable revenue growth and
healthy profit margins which makes it a good investment target.

Infosys is a major corporation with a significant market capitalization. This makes any acquisition a
complex and very expensive undertaking. An acquisition of this scale would likely face intense
investigation from regulatory bodies in various countries, including India, potentially complicating or
even preventing a deal entirely. It has a dispersed ownership base, making it harder for a potential
acquirer to gain the necessary shareholding to initiate a takeover.

Takeover of Infosys is not impossible, several practical and logistical complexities make it less likely.
Conversely, as a long-term investment, Infosys presents a compelling option. Its position in a growing
industry, combined with generally sound financial metrics, could make it a worthwhile choice for
investors with a moderate risk tolerance and a long investment horizon.
8. Conclusion
Infosys has a strong governance structure focused on transparency, accountability, and serving
stakeholders. Its board, with both executive and independent directors like Chitra Nayak, Govind Iyer,
Helene Auriol Potier, and Nitin Paranjpe, plays a key role. This is supported by a Code of Conduct,
market analysis, and committees dedicated to ethical practices and risk management.

There should be regular board evaluations to ensure alignment with corporate governance best practices,
enhance stakeholders communication, integrate sustainability practices into corporate governance,
directors must be provided with ongoing training and development opportunities to stay updated on
evolving governance standards and industry trends.

References
Microsoft Word - Committee Composition_effective Jan 1_2024 (infosys.com)

NOMINATION AND REMUNERATION POLICY OF INFOSYS LIMITED

draft-new-articles-association.pdf (infosys.com)

Infosys Integrated Annual Report 2022-23

BSEINDIA

PowerPoint Presentation (infosys.com)