Chapter 9:Directors in Action

There has been a decline in the high regard directors were held over a period of time due the corporate scandals. Structural reforms have given comfort to investors and general public, what goes on in the boardroom is only known to the board. Too many directorships makes many directors ineffective Surveys point to ignorance on the part of directors about many provisions in the laws.
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Ground rules for performing multitudes of roles and duties

Applicable to all directors Must have reasonable awareness about company laws. Must know the corporate governance guidelines in force in the country. Must have detailed knowledge of MOA and AOA Must know about business, products, customers, markets, major shareholders, promoters stake and influence on the company etc
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Contd.
Risks faced by the company Whether the board is active or passive Strategic role Culture in the boardroom Do I get all information for the conduct of my duties? Is there a whistleblowing mechanism in place?
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Contd.
Is there an ethical code of conduct for directors? Is there any conflicts of interest in my being director of the company?

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Contd.
Applicable to Non Executive Directors Protect the interests of the promoters while keeping in mind the interests of outside shareholders. Apprise the CEO and EDs if outsiders about the promoters vision, goals and objectives. Act as a mediator between the CEO and promoter when gaps exist in ideas and plans. Guide younger directors Act as a buffer between promoters/families and the board, Push for items that will protect promoters interests.
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Contd.
Applicable to Independent Directors Understand clearly the meaning of independence. Understand the expectations placed on him in the current context of CG Never accept a directorship if there is an iota of conflicts of interests Limit directorships to manageable numbers. Apprise the board of the necessity of establishing an information architecture Take an independent view of any situation and encourage candour in the boardroom.
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Contd.
Be ready to serve on committees Attend all board, committee meetings and AGM

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Contd.
Applicable to committee members Have clear understanding of the duties of the committee member Ensure that sufficient time is allotted to discuss matters. Ensure that the expert hand disseminates knowledge among members Ensure that the committee acts independently of management
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Contd.
Applicable to committee chairs Engage members in such a manner as to get full participation Fix meeting schedules in advance Draw agendas meeting in advance and circulate Encourage candour (frankness) Take initiative to create a charter Monitor compliance with statutes and regulations
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Contd.
Applicable to lead independent director Preside over executive sessions of IDs Act as a liaison between IDs and Chairman and /or CEO Take an active role, with chair, in the board evaluation process Help board to reach a consensus on contentious issues Work towards establishing a rapport between CEO/Inside directors and outside directors Take leadership in organizing training and development programs for directors
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Contd.
Applicable to Chairman of the board Lead the board in establishing values and standards for the board and the company. Promote highest standards of CG and ensure compliance with all laws and regulations Create sense of teamwork among board members. Delegate power and responsibilities suitably Draw clear lines separating the authority of board and management Conduct board meetings in an effective manner Take lead in establishing an information architecture
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Contd.
Take lead in identifying development needs and organizing for the programmes. Take lead in evaluating the CEO, other EDs and other top management personnel Take lead in evaluating individual directors and board as a whole Take lead in evaluating the functioning of committees Chair AGMs and EGMs Take lead in unifying board as a group Take lead in putting a succession plan in place Take lead in replacing the CEO when required
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Contd.
Applicable to Institutional nominees Have a long-term view about the health of the company Be concerned about risks Advise CEO and board on specific matters Apprise the board of the institutions concerns. Close monitoring of the company as fiduciary of their clients Take care to see that conflicts of interest do not exist. Advise institution to refrain from dealings with the company that might result in conflicts of interest Ensure seamless flow of information to successor
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Contd.
Applicable to Executive Directors Be conversant with all laws and regulations applicable to directors Must have thorough knowledge of his functional area. Must be able to offer insights to the board on the area. Have a reasonable depth of awareness about the company beyond area. Never indulge in activities leading to questions of integrity Refrain fro taking up director positions outside if likely to affect role in the company
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Contd.
Strictly follow the code of conduct for directors/employees Be a role model for employees Never indulge in activities that will result in conflicts of interest Maintain absolute confidentiality about the financial matters Never indulge in stock market deals in the companys shares If belong to promoter family, should not indulge in activities based on privileged information.
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Contd.
Director should abstain from meetings which concern him or matters in which he is interested. Never show the authority of control over management

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Contd.
Applicable to Managing Director/CEO Be conversant with all the laws and regulations applicable to the company, board, MD etc Act as one of the directors in the boardroom. Must have thorough knowledge of all aspects of business. Never indulge in any activity leading to questions on integrity. Refrain fro taking up director positions outside if likely to affect role in the company Strictly follow the code of conduct for directors/ employees
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Contd.
Be a role model for employees Never indulge in activities that will result in conflicts of interest Maintain absolute confidentiality about the financial matters Never indulge in stock market deals in the companys shares If belong to promoter family, should not indulge in activities based on privileged information.
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Contd.
Ensure clear delineation of power an authority between MD/CEO and other EDs should abstain from meetings which concern him or matters in which he is interested. Never show the authority of control over management

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