Corporate governance And Sustainable Presentation Transcript
Corporate Governance and Sustainable Development Pavan Kumar Vijay Past President, ICSI MD, Corporate Professionals Date: 23/02/2010 Delhi University
Corporate Governance rests with the Vision and Perception of the Leadership
A Leader need to adopt a
Vision for Corporate Governance
Corporate Governance Framework Output – Input = Wealth Created ? Sustainability Happiness and Prosperity of all Stakeholders Reinvestment Distribu- tion
Payment of Taxes and Partnership in National Development Projects
Wealth Creation Wealth Management Wealth Sharing Enhanced Capabilities Best Management Practices are Vital Here Law and Ethics are Vital Here
Stakeholders in Value Chain SUPPLIERS CUSTOMERS HUMAN RESOURCE Supply Funds, Materials and Services Value Addition and Management of Resources Give Opportunity to Co. to Satisfy their Needs Adequate Returns for Funds, Material and Services Supplied Adequate Salary and Security for leading a Happy Life Best Quality Products and Customer Care at Minimum Prices ROLE OF STAKEHOLDERS EXPECTATIONS OF STAKEHOLDERS Potential Suppliers, Human Resources and Customers Biological, Economic and Cultural Environment PUBLIC PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT
Principles of Corporate Excellence Fairness to all stakeholders Mutual Trust, Transparency and Togetherness Unrestricted Communication and Continuous Feedback Sharing Knowledge, Success Stories and Experience Sharing Happiness and Concerns Helping Each Other – Round the Clock
Infact, these principles are the foundation of Best Governed Organisations irrespective of their form and size
Advantages of applying
Best Corporate Governance Practices
Growing Revenues Growing Profits Growing Market Value
Widespread Goodwill and Brand Reputation
Access to Global Markets Better Access to Human Capital Ready Market for New Products Widening Customer Base
Enhanced Trust and Confidence of all Stakeholders
EMPLOYEES INVESTORS CUSTOMERS SUPPLIERS GOVERNMENT AND REGULATORS SOCIETY
Environment Civil Society Business Society SUSTAINABLE DEVELOPMENT
Commitment to well-being and progress of all stakeholders is our age old mantra
Satyam Vada Dharmam Chara - Taittariya Upanishad
“ Forever speak the truth and follow the dharma ”
Truth : Disclosure of Actual State of Affairs (Transparency in operations and transactions)
Dharma : “Dharma is for the stability of society, the maintenance of social order and the general well-being and progress of humankind .”
- Karna Parva of the Mahabharata. Verse-58 in Chapter 69
Governance Concept in ‘Ramayana’
To provide “the maximum happiness for the maximum number of people for the maximum period, based on the principles of Dharma – righteousness and moral values.”
Care for Panchtatvas - Prithvi , Jal , Vaayu , Akaash and Agni that make a human being
This is our approach to
The four essential principles of Mahatma Gandhi's philosophy Truth , Ahimsa , Trusteeship and Constructive Action
Corporates are also expected to use their
Capacity, Knowledge and Resources Maximisation of stakeholders’ value and well-being and progress of humankind TOWARDS THROUGH Transparency, accountability and truthful disclosure of state of affairs Dharma Truth
This is our own age old mantra of
Outstanding Performance, Higher Profits, Expanded Market Reach and the like FAILS to protect a company which has put good governance & ethics at the back burner…. History is Witness S U C E S S D I S A S T E R
History has also repeated itself
The SATYAM Fiasco
A mockery of Corporate Governance
The Satyam Fiasco
Out casting of Minority Shareholders
Diversion of property from Company where the promoter has merely 8.5% stake to a company with 100% stake.
Attempt to turn company sitting on cash into a debt-ridden company.
Fudging of accounts of thousands of Crores.
Secret behind building foundations ..…Only the culture of strict adherence to good compliance can keep a company ahead on sustainable basis , bring in larger profits…
CORPORATE GOVERNANCE AT
Company Philosophy on Corporate Governance Corporate Governance standards should go beyond the law. Maintain high degree of disclosure levels. When in doubt, disclose. Make a clear distinction between personal conveniences & corporate resources. Management is the trustee of the shareholders’ capital and not the owner.
Board Meetings 2. Drafting of Agenda by Chairman of the Board & Company Secretary in consultation with Lead Independent Director 3. Circulation to all Directors 4. Recommendations for inclusion of items 5. Inclusion of items in the agenda 6. Meetings of Committees 7. Formal Board Meeting with video conferencing facilities to all directors 1. Scheduling of dates of Board Meetings
Committees Management Audit Committee – 6 Members – All Independent Directors (Cl. 49 requires minimum 3 directors) Compensation Committee – 4 Members – All Independent Directors (Non-mandatory under Cl 49) Nomination Committee – 5 Members – All Independent Directors (Not required under Cl 49) Investors’ Grievance Committee – 4 Members – All Independent Directors (Cl 49 requires only the Chairman to be independent) – 0 Pending Complaint Investment Committee – 7 Members – All Executive Directors (Not required under CL 49) Each committee has its detailed charter.
Compliance with Non-mandatory requirements
Maximum tenure of independent directors is nine years.
Dissemination of regular information to investors through e-mail, telephone, face-to-face meetings, road shows etc.
Presentations are made by executive directors to familiarize the new non-executive directors with the Company’s operations.
Evaluation of non-executive directors through a peer-evaluation process.
Whistle blower policy providing direct access of employees to Chairperson of Audit Committee.
And That’s what makes Infosys A value driven organization CRISIL – CRISIL GVC Level 1 ICRA – CGR 1
Present Status of CG Practices – The CRISIL Experience Practice Status Equitable Treatment of Shareholders Moderate Transparency and Disclosure Relatively strong Composition of Board Scope for improvement Functioning of Board Moderate
Value Addition - The CRISIL Experience Stakeholders Status Share Holders High Debt Holders Highest Employees Moderate Customers High Suppliers Scope for improvement Society Scope for improvement
Companies that have followed these
Consistently earned high returns,
increased their net worth and
enhanced their shareholders wealth
Invested significantly in proactive research and development
Developed people into ‘ achievers’ than just ‘ performers’
Dealt ethically with customers, government and business partners
Maintained and updated their professional management culture, system and processes
WINNING EMPLOYEES XCELLENCE GROWING INVESTORS DELIGHTED CUSTOMERS TRUSTED SUPPLIERS SATISFIED GOVERNMENT AND REGULATORS HAPPY SOCIETY