CORPORATE

GOVERNANCE,
SOX & REPORTS
 Parliament Commissioned Cadbury Committee in 1990 &
Report presented in 1992
 Surfaced Potential Reasons
 Projected its Possible Effects

 Suggested Measures:
 Separation of Chairman & CEO
 Appointment of Independent Directors/NED’s
 Reduced Conflict of Interest at Board Level
 Formation of Independent Audit Committee
 Effectiveness of Internal Control System
 Greenbury presented in 1995, concerned Executive Pay Rises
 Formation of Remuneration Committee

 Hampel in 1998 Consolidated Cadbury & Greenbury

 Analysed Business during Pre & Post Reports i.e. Cadbury &
Greenbury period.
 Hampel suggested Further Improvements
 London St Exc adopted Hampel
 Turnbull in 1999 Suggested to Improve Internal Controls
 Risk Assessment & Mitigation Process emphasized
 Performance of Annual Review of Internal Controls

 Sir Derek Higgs on request of British Govt in Higgs Report in

2003 further
 Evaluated Role & Effectiveness of NED’s
 Suggestion of having at-least 50% NED’s
 Nomination Committee be Headed by NED
 ED’s Tenure should not exceed 6 years
 Board’s Annual Self Performance Evaluation
These Reports Finally Paved the Way Forward for
Sarbans Oxley Act.
 Major Initiatives of SOX

 Public Company Accounting Oversight Board

 Auditors Independence was Emphasized
 Corporate Responsibility
 Enhanced Financial Disclosures
 Studies & Reports
 Corporate and Criminal Fraud Accountability
 Corporate Tax Returns
 White Collar Crime Penalty Enhancement
 Corporate Governance
Formation of Sub Committees:
i) Audit Committee
 Overseeing The Financial Reporting
 Choice Of Accounting Policies And Principles
 Hiring & Performance of the External Auditor
 Regulatory Compliance
 Internal Control
 Internal Audit Function
 Risk-Management Policies
ii) Nomination Committee
 Identifying Individuals to serve on Board
 Selecting Nominees for shareholder selection
 Board Evaluation Process
 CEO Evaluation process

iii) Remuneration Committee

 Setting the Compensation of CEO
 Setting performance-related Goals for the CEO
 Evaluating Performance of CEO
 Other Executives Compensation
 Compensation of Non Executive Employees
 Board’s Compensation Setting
iv) Governance Committee
 Evaluating the company’s Governance Structure
 Recommending Improvements, as required
CORPORATE GOVERNANCE CONTINUED

 Duties of Directors to Various Stakeholders

 Composition of Board i.e. Executives & NED’s
 Separation of Role; Chairman & CEO
 Consideration of Internal Controls
 Enhanced Reporting in Annual Report