This is a power point presentation which is related to Birla committee report on corporate governance.

3. Kumar Mangalam Birla Committee appointed by Securities
Exchange Board of India in early 1999 under the chairmanship of
Shri Kumar Mangalam to promote and raise the standards of good
corporate governance.
Kumar Mangalam Birla, Chairman of
Birla Committee

4. The major recommendations of the committee are as follows.
BOARD OF DIRECTORS
Birla Committee report have recommended that the board of
company should have an optimum combination of executive and non
executive directors with 50% of the board consisting of non-executive
directors. The number of independent directors would depend upon the
chairman of the board. In case of non-executive chairman, at least one-
third of the board should comprise of independent directors. In case of
an executive chairman, at least 50% of the board should be
independent. The tenure of the directors should be as per Companies
Act.
All transactions of the non-executive directors should be disclosed in
the annual report. A nominee of one company is appointed as the
director of a company he should assure the same accountability as any
other director of the company.

5. AUDIT COMMITTEE
The committee recommends the powers of the audit committee for
maximum disclosure of information.
The composition of the Audit Committee should be as follows:
a) At least 3 non-executive directors as members.
b) One of the independent directors as chairman.
c) The finance director, head of the internal audit and a
representative of external auditor as invitees at the meetings of
the audit committee.
d) The company secretary as the secretary of the committee.
The committee should meet at least thrice in a year. One meeting
must be held before finalization of annual accounts and one necessarily
after 6 months.

6. REMUNARATION COMMITTEE
The committee recommends that the company should have a
credible and transparent remuneration policy on its directors. It asserts
the company’s policy on remuneration package of executive directors.
The remuneration of non executive directors should be decided by
the entire board.
Shareholders should be fully informed about the remuneration of
directors.
ACCOUNTING STANDARDS AND FINANCIAL REPORTING
The committee recommends that,
Companies which are required to give consolidated account of all its
subsidiaries in which they hold 51% or more of its share capital.
If the company is having several products and business the financial
reporting of each product division should be available to the
shareholders.

7. MANAGEMENT
The board must clearly define the role of the management.
Management comprise the Chief executive, executive directors and the
key managers of the company, involved in the day-to-day activities of
the company. The functions of management as recommend by the
committee are the following
a. Providing necessary inputs in respect of company’s strategy policy
etc for decision making process.
b. Apply the policies and Code of Conduct of the Board.
c. Provide up to date and first hand information to the board in
respect of financial matters.
d. Setting up internal control system for business requirements.
e. Focus on the day-to-day affairs in behalf of its shareholders.
f. Ensuring compliance of all rules and regulations
g. Facilitate efficient working of Board Committee

8. As a part of management disclosure, in addition to the Director’s
Report, Management Discussion and Analysis Report (MDAR) should
form a part of the annual report to the shareholders. MDAR should
include the following:
Industry structure and developments;
Opportunities and threats, risks and concerns;
Product wise performance;
Internal control system;
Operational performance;
Financial performance;
Number of workers employed.
SHAREHOLDERS
The company assumes that the shareholders are the owners of the
company and as such they have certain rights and responsibilities.

9. As such the general body meeting provide an opportunity to the
shareholders to address their concerns to the Board and comment on
the overall functioning of the company on the basis of annual report.
Shareholders should have right to participate in and have sufficient
information on:
a. Decisions concerning basic corporate changes;
b. Takeovers, sale of assets or division of the company;
c. Changes in capital structure which has the potential to bring about a
change in control of the company.
The committee observe the following actions taken by SEBI for
strengthening the governance.
• Disclosure norms for initial public offers.
• Cash flow and fund flow statement in annual report.
• Quarterly result performance.
• Rules and regulations of transfer and transmission of shares.

10. • Sending the balance sheet copy to the shareholders.
• Regulations on takeovers and acquisitions.
• Preferential allotment procedure.
The Companies Act 2013 emphasis the following matters for the strong
Corporate Governance.
• Every company is required to appoint one resident director on its
board.
• Nominee directors shall no longer be treated as independent director.
• Listed companies and specific classes of public companies are required
to appoint independent directors and woman directors on their board.
• The companies act for the first time codifies the duties of directors.

11. CORPORATE GOVERNANCE IN FAMILY BUSINESS
A family business is a commercial organization in which decision
making is influenced by multiple generations of family-related by blood
or marriage.
The corporate governance is required in a family business due to
the following reasons-
 When the business grows, the ownership and management
responsibilities will pass from one generation i.e., the founder to the
next, and conflict may result if there is no policy to dictate a succession
plan.
 Governance is required for the growth of the business as it defined
the company’s structure, people roles and responsibilities and the chain
of command.
 As there is tension and disagreements in every families a governance
framework can help to keep the peace.

12.  Along with growth of business the non family employees will also
grows, and there is a need of managing, the performance evaluation,
rewards and a promotions for preventing conflicts.
In a family business good corporate governance is possible due to
the following features-
 Most of the family firms, treat that company’s money is family’s
money and as result they simply do a better job of keeping their
expenses under control.
 Family controlled business are generally take judicious decisions, they
generally invest in very strong projects.
 As a family run business carries little amount of debts, they don’t
need to make big sacrifices to meet financing demands during the
recessions.

13.  Family run business believes in fewer acquisitions. They deal
acquisition meant for simple geographic expansion or else close to the
core of their existing business.
 Though family run business focused on core businesses many of them
are interested in diversification.
 Many of the companies keep better talent and are more international
in nature.
Corporate governance is carried out in family business through
family charter and family council.
Family charter- Family charter is the constitution of the family values
and beliefs. It also is a code of conduct for family members.
Family council- Family council is forum to settle the family disputes.
Usually all adult members of the family are the members of the council.
It meet two or more times a year to discuss various family issues
including business issues.

14. Family council gives every one a chance to voice their opinion on
business decisions, succession, planning, strategic objectives and the
future of the company.
CORPOARTE GOVERNANCE IN STATE OWNED BUSINESS
State owned business are either wholly or partially owned and
managed by a government. It is otherwise known as State owned
company, State owned entity, State enterprise, Publicly owned
corporation, Government Business Enterprise.
In India state owned enterprise is termed a public sector undertaking
or central public sector enterprises. These companies are owned by the
central government or one of the many sate or territorial governments
or both.
Following factors are considered for effective corporate governance in
SOE’s.

15.  There should be an effective legal and regulatory framework for state
owned enterprises. It is necessary to have a level-playing field in
markets where SOE’s and private sector companies compete in order to
avoid market distortions.
 Consider properly the rights of all shareholders and ensure their
equitable treatment and equal access to corporate information.
 As it is state enterprise, high degree of transparency is required in
disclosing all material facts about the organization, such as objective
and their fulfillment, voting rights, financial assistance from government
etc.
It is the responsibility of the board to carry out its functions, according
to the objective set by the government and ownership entity. If
employees participation is required in the board, that should be carried
out in a way which will enhance the board skills and information. It is
also the duty of the board, to carry out annual evaluation to appraise
their performance.

16. REFERANCE
 Business Environment – Suresh Bedi