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September 15, 2011 Coal India Limited
CORPORATE GOVERNANCE
September 15, 2011 Coal India Limited
Companies need to ensure
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code of conduct for all managers ,
long – term strategic plans ,
CSR initiatives,
submission of regular and accurate financial statements,
providing of regular information about financial position
of the company to the shareholders ,
evaluation by the board of its performance,
independent Audit Committees and
effective risk management plans.
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September 15, 2011 Coal India Limited
CORPORATE GOVERNANCE IN PSE’S
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PSE’s today play a significant role in accelerating the
economic as well as social development of the country .
This can be facilitated by following sound ,prudent and
transparent business principles and practices .
They are guardian or trustees of precious public money .
They deal with tax payers money and are therefore
accountable to Parliament. Under such circumstances ,
there is a need for a strong vigilance organization in the
PSE’s with a set of rules / code of conduct to guide the
actions and conduct of these Enterprises.
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September 15, 2011 Coal India Limited
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And as required Corporate Governance in PSE’s is more
robust than that in most private counterparts .
Apart from the Parliament ,PSEs are accountable to other
authorities under several regulations like
the Comptroller and Auditor General of India (CAG) ,
Central Vigilance Commission (CVC),
three layers of audit control (Statutory Audit, Internal
Audit and CAG) and
the Rights to Information Act (RtI)
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September 15, 2011 Coal India Limited
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This was evidently apparent during the recent economic
turmoil in private companies when investors fled to public
enterprise stocks due to
much better confidence of stakeholders in PSE
management .
PSEs are open and transparent ensuring fairness in their
transactions within and outside the Company with
investors , customers ,employees ,partners ,
competitors and society at large.
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September 15, 2011 Coal India Limited
CORPORATE GOVERNANCE IN ONGC
Mr. R.S .Sharma , CMD , ONGC says –
Corporate Governance in ONGC is led by
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strong emphasis on human values ,
individual dignity and adherence to honest , ethical and
professional conduct .
The endeavors in this regard are focused on highest level of
transparency ,openness and accountability and fairness in
all areas of operation ,meeting the aspirations of all its
stakeholders .
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September 15, 2011 Coal India Limited
Mr. Arup Roy Choudhury ,CMD,NTPC says –
As a good Corporate citizen , the company is committed to
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sound corporate practices based on conscience , openness,
fairness ,professionalism and
accountability in building confidence of its various
stakeholders in it thereby paving the way for its long term
success.
NTPC is always on forefront in adopting and implementing
sound governance norms.
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September 15, 2011 Coal India Limited
Mr. Chandra Shekar Verma , Chairman , SAIL says –
SAIL is committed to
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practice the highest standard of corporate governance
by ensuring transparency , disclosures and reporting
that conforms fully with laws ,regulations and guidelines
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promotes ethical conduct throughout the organization ,
with the primary objective of enhancing shareholders
value , while being a responsible corporate citizen.
The Company recognizes that the Board of Directors is
accountable to all shareholders and that each member of
the board owes his first duty for protecting and
furthering the interests of the Company.
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September 15, 2011 Coal India Limited
Mr. B. Prasada Rao, CMD , BHEL says –
BHELs Corporate Governance policy is based on the
following principles:
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Independence and versatility of the Board
Integrity and ethical behavior of all personnel
Recognition of obligations towards all stakeholders –
shareholders, customers,employees,suppliers and the
society at large.
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Shri N.R. Narayana Murthy, Chief Mentor, Infosys
Limited.
Corporate governance is maximizing the shareholder value
in a corporation
ensuring fairness to all stakeholders, customers, employees,
investors, vendors, the government and the society-atlarge.
September 15, 2011 Coal India Limited
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transparency and raising the trust and confidence of
stakeholders in the way the company is run.
owners and the managers operating as the trustees on
behalf of every shareholder - large or small." 10
With the goal of promoting better corporate governance
practices in India, the Ministry of Corporate Affairs,
Government of India, on 1st October 2003 set up :
National Foundation for Corporate Governance (NFCG)
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in partnership with Confederation of Indian Industry (CII),
Institute of Company Secretaries of India (ICSI) and
Institute of Chartered Accountants of India (ICAI).
September 15, 2011 Coal India Limited
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In the year 2010, stakeholders in NFCG has been
expanded with the inclusion of ICWAI and the National
Stock Exchange.
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CG is the system by which companies are directed
and controlled by management in the best interest of
shareholders and others.
The BOD are responsible for governance of their
companies
September 15, 2011 Coal India Limited
CORPORATE GOVERNANCE
A number of reports and codes of CG has been
published internationally
SEBI also has recently introduced a new clause (i.e.
clause 49 ) in the listing agreement entered between
a stock exchange and a company who desires to list
its securities on stock exchange.
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As per this clause, if a company desires to list its
securities on a stock exchange, then it has to agree
and implement the code of corporate governance
The company is also required to obtain a certificate
from the auditor/practicing company secretary as
regard compliance of the conditions of CG as given in
this clause.
The various items of this clause are:
i. Composition of board
ii. Setting up of audit committee
iii. Remuneration of directors
iv. Meeting of BOD etc.
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Board of
BOD shall have an optimum combination of
directors
executive and non –executive directors with not
less than 5o% of the BOD comprising of nonexecutive directors.
At least half of the Board should comprise of
September 15, 2011 Coal India Limited
CONTENTS OF CLAUSE 49 OF LISTING
AGREEMENT (CG)
independent directors
It is very much clear that the overall shift is on
comprising the board with independent person,
who can take unbiased decisions for the welfare
of the stakeholders
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INDEPENDENT DIRECTOR
It shall mean a Non-executive director of the company who -
Apart from receiving director’s remuneration, does not have
any material pecuniary relationship or transactions with the
company ,its promoters ,its directors , its senior management
or its holding company, its subsidiary(s) and associates which
may affect independence of the director;
September 15, 2011 Coal India Limited
ID
Is not related to promoters or persons occupying
management positions at the board level or at one level below
the board
Has not been an executive of the company in the immediately
preceding three financial year;
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partner or an executive during the preceding 3
years of any of the following:
a) statutory audit firm/internal audit that is
associated with the company
b) The legal firm/consulting firms that have a
material association with the company.
September 15, 2011 Coal India Limited
Is not a partner or an executive or was not
Not a material supplier, service provider,
customer or lesser/lessee of company
Not a substantial shareholder-owing 2%or more
voting shares
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AUDIT COMMITTEE
Minimum 3 members (any director)with 2/3 independent
All members financially literate & at least one director
having an expertise in accounts/FM
Chairperson independent director
Minimum number of meetings in a year 4,one meeting
before finalization of accounts. Maximum gap between two
September 15, 2011 Coal India Limited
AC
meetings is 4 months.
Quorum -2 members or 1/3 of members (higher) & out of
which minimum of 2 independent director
Co. Secretary shall act as a secretary of AC
AC to invite financial executive of co. In its meeting
However, they can meet without his presence too
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AC
Will maintain liaison with Co. & Auditor .
statement
Review functioning of whistle blower mechanism
Review performance of statutory/internal auditors
AC Mandatorily
Management discussion & analysis of FS
review
September 15, 2011 Coal India Limited
Consider matters to be included in directors responsibility
Statement of significant related party transactions
Management letters of IC weaknesses issued by statutory
auditors
Internal audit reports relating to internal control weaknesses
Appointment/removal/terms of remuneration of chief of
internal auditor
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REMUNERATION OF DIRECTORS
Remuneration of non-ED is decided by BOD,
of Directors
after obtaining prior approval of shareholders
Sitting fee as per Co. Act, paid to non ED does
not require previous approval of shareholders
September 15, 2011 Coal India Limited
Remuneration
If stock option to non ED , limit for maximum
no. to be granted to non –ED in one FY & in
aggregate to be disclosed along with disclosure
of elements of remuneration package , details of
increments , service contract in annual report.
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BOARD PROCEDURES
Meeting 4 times a year with maximum gap 4
Procedures
months between two meetings
Code of conduct for Board/Senior management
laid by BOD.Shall be posted on the website of
the company
A director not to be a member in more than
September 15, 2011 Coal India Limited
Board
10 committees or chairperson in more than 5
committees across all co’s in which he is a
director.
(Committee for this purpose includes audit
committee and shareholders redressing
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REGARDING SHAREHOLDER
In case of appointment/re-appointment of a
director ,shareholder must be provided with its brief
resume ,nature of his expertise & names of
companies in which he holds directorship.
Information like Quarterly results to be put on
companies web site or on SE’s website
September 15, 2011 Coal India Limited
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Board committee under chairmanship of non-ED to
look into redressing of shareholders & investors
complaints
To expedite the process of share transfer ,this work
to be delegated to an officer or share transfer agent
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SUBSIDIARY COMPANY
At least one independent director of holding company
shall be a director in material non –listed Indian
subsidiary company(whose turnover/net worth exceeds
20% of consolidated turnover/net worth of holding
and its subsidiary in immediately preceding Accounting
Year
September 15, 2011 Coal India Limited
SC
AC of holding shall review the financial staement
(particularly investment) by material non-listed Indian
subsidiary company
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CEO/CFO The CEO or the CFO or any other person heading
certificati
the finance function discharging that function shall
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certify to the Board that:
They have reviewed FS and CF for the year and
that to the best of their knowledge and belief :
A)
September 15, 2011 Coal India Limited
CEO/CFO CERTIFICATION
(I ) These statements do not contain any
materially untrue statement or omit any material
fact
(ii) These statements together present a true and
fair view of the company’s affairs
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There no transactions entered that are fraudulent, illegal
and violative of the company’s code of conduct
C)
They accept responsibility for establishing and
maintaining internal controls wrt financial reporting
D)
September 15, 2011 Coal India Limited
B)
They have indicated to the auditors and Audit
Committee
-Significant changes in internal control during the year,
-Significant changes in accounting policies during the
year ,and instances of significant fraud
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There shall be separate section on CG in the
Annual Reports of company with a detailed
compliance report on CG
Compliance
The company shall obtain a certificate either
from the auditors or practicing company
September 15, 2011 Coal India Limited
Report on
Corporate
Governance
secretaries regarding compliance of conditions
of CG
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September 15, 2011 Coal India Limited
THANK YOU
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