All of the above leading to inefficient corporate governance
At least once a year, a general meeting of shareholders to be convened with a specified agenda and information provided for the same
The management shall provide documents and reports including the annual report for the meeting
The company should facilitate personal exercising of shareholder’s voting rights or by proxies.
Those not able to attend should follow the meeting through electronic channels.
The management shall brief the board on the implementation of the strategic decisions
For important decisions which may change the asset, financials or earnings of the enterprise, the management shall take the approval of the board
The management informs the board regularly and periodically issues related to planning, business development, risk management. It also briefs the board on the budgeted performance vs actual and reasons for the deviations thereof.
The Board shall specify the management’s information and reporting duties in detail
All Board members should ensure that members of the board, the management and the staff follow the confidentiality obligations accordingly
In case of a takeover offer, the Board and the management of the target company a statement of reasons so that the shareholders could take an informed decision on the offer. EGM may be convened for the purpose
Extending loans to Board members and management members should have the approval of the Board
The annual report should contain a section on Corporate Governance
Compensation of the Management to be determined by the Board depending on the performance of the member, organization & economic situation.
Compensation related information to be published in the annual reports wrt fixed, performance related and long term incentives.
Management members are subject to a non-competition obligation
Management members as part of their work are not to demand or grant unlawful benefits to third parties
Board and management are bound by the best interests of the enterprise and are not to use business opportunities for their personal benefits
Conflict of interest to be reported at the earliest
Any side activities may done by the management members only with the prior approval of the Board
The chairman of the Board shall not be part of the audit committee
The Board chairman shall regularly interact with the management on business development, risk management and strategy
The Board may form committees with sufficient expertise
Audit committee to be formed handling issues of accounting, risk management and issuing the audit mandate to the auditor. The chairman of this committee needs to be a specialist wrt accounts and internal control processes.
Board should have members who have knowledge, abilities and expert experience to complete their tasks
Adequate no. of independent directors to form part of the board.
Not more than 5 directorships in non group companies for a director
Fixed as well as performance based compensation for the Board members
Above should be reported individually in the CG report
All Board members bound by the enterprise’s best interests
Any conflict of interest to be reported to the Board and in turn reported to the General Meeting. Termination of the mandate if required
Agreements and contracts for work between members of a Board to need prior approval from the Board
Examination of the efficiency of the activities of the Board regularly
As soon as co becomes aware of the fact that an individual exceeds or falls short of 5,10,25,50 or 75% of the voting rights by means of purchase or sale or any other manner, the management shall disclose this fact without delay
All new facts made known to financial analysts etc shall be made known to the shareholders also.
Suitable communication media – Internet, email etc to inform shareholders and investors promptly
Information disclosed abroad (corresponding capital law provisions) may also be disclosed domestically without delay.
Purchase or sale of shares by Board members or Management team to be informed to the company immediately and published as a disclosure
Dates of publishing financial reports, interim reports, notice for meeting etc may be disclosed sufficiently in advance.
Internet site should be clearly structured and all required information about the enterprise should be available there.
Shareholders and third parties may be informed about the company’s financial through annual and interim reports
These may be prepared under internationally recognized accounting principles and form the basis for taxation
FS shall be prepared by the management and examined by the auditor and the Board. These should be publicly accessible within 90 days and interim reports within 45 days of the reporting period.
CG reports shall contain information on stock options and similar incentive based systems of the company
The co. shall publish a list of third party companies in which it has a shareholding that is not of minor importance for the co.
Notes on relationships with related parties shall be provided in the consolidated financial statements
The auditor before election shall submit a statement if the firm has any business, financial or personal relationship with the company
The Board shall commission the auditor to carry out audit of the firm for a fee
The auditor shall inform the Board without delay all facts and events relevant to the Board which arise during audit
Any misstatements by the Management shall be informed and recorded in the report.
The auditor takes part in the deliberations of the Board wrt annual financial statements.