in this PPT there is a complete description about Narayan Murthy Committee on Corporate Governance

1. Narayan Murthy
Committee
A committee that gave a major breakthrough
for Indian Corporate Governance

2. Narayan Murthy Committee
01
INTRODUCTION
03
NON-MANDATORY
RECOMMENDATIONS
02
MANDATORY
RECOMMENDATIONS
04
CLAUSE-49

3. INTRODUCTION
01
Why Narayan Murthy Committee?

4. ● The Securities and Exchange Board of India
(SEBI) had constituted a Committee on
Corporate Governance in 2002
● It was set up to review Clause 49, and
suggest measures to improve corporate
governance standards.
● Some of the major recommendations of the
committee primarily related to audit
committees, audit reports, independent
directors, related party transactions, risk
management, directorships and director
compensation, codes of conduct and
financial disclosures.
INTRODUCTION

5. MANDATORY
RECOMMENDATIONS
02

6. Mandatory Recommendations
AUDIT
COMMITTIEES
Strengthening its
responsibilities
DISCLOSURES
Improving the quality
of financial
RISKS
Assess and disclose
business risks in the
annual reports
COMPENSATION
Improved disclosures
relating to compensation
paid to non-executive
directors.

7. NON-MANDATORY
RECOMMENDATIONS
03

8. MANDATORY RECOMMENDATIONS
NON- QUALIFIED
STATEMENTS
Mercury is the closest
planet to the Sun
TRAINING
Instiute a system of
training of the Board
EVAULATION
Evaulation of the
performance of Board
NON-

9. CLAUSE-49
04

10. CLAUSE-49
BOARD SUBSIDARIES
DISCLOSURES
AUDIT
COMMITTEE
2 3 4
1 5 7
9
CEO/CFO
CERTIFICATION
REPORT ON
CORPORATE
GOVERNANCE
COMPLIANCE

11. 1. BOARD OF DIRECTORS
A. COMPOSITION B. COMPOSITION
AND DISCLOSURE
C. OTHER
PROVISIONS
D. CODE OF
CONDUCT

12. COMPOSITION
• Combination of executive and non
executive directors with not less
than fifty percent
• At least one-third of the board
should comprise of independent
directors

13. COMPENSATION AND
DISCLOSURE
Any compensation paid to non-
executive directors shall
require previous approval of
shareholders in general
meeting

14. OTHER PROVISIONS
• The board shall meet atheist four
times a year
• A director shall not be member in
10 committees or act as Chair in
more than 5 committees across all
companies in which the person is
action as Director

15. CODE OF CONDUCT
• The Board shall lay down Coe of
Conduct for all Board members
and senior management of the
company
• All Board members and senior
management personnel shall
affirm compliance on code on an
annual basis

16. 2. AUDIT COMMITTEE
A. QUALIFIED &
INDEPENDENT
B. MEETING
C. POWERS D. ROLES
E. REVIEW OF INFORMATION

17. QUALIFIED AND INDEPENDENT COMMITTEE
• The Audit Committee shall have
minimum three directors as
members
• All members of the committee shall
be financially literate and at least
one member shall have expertise
in accounting or related fields

18. MEETING OF AUDIT COMMITTEE
The audit committee should
meet at least four times in a
year and not more than four
months shall elapse between
two meetings.

19. POWER OF AUDIT COMMITTEE
• To investigate any activity within
its terms of reference.
• To seek information from any
employee.
• To obtain outside legal or other
professional advice.
• To secure attendance of
outsiders with relevant expertise,
if it considers necessary.

20. ROLES OF AUDIT COMMITTEE
• Disclosure of its financial information
• The appointment and removal of the
statutory auditor and the fixation of
audit fees.
• Approval of payment to statutory
auditors
• Reviewing the annual financial
statement before submission to the
board for approval
• Reviewing performance of statutory
and internal auditors

21. REVIEW OF INFORMATION
 Analysis of financial condition
 Statement of significant related
party transactions submitted by
management;
 Management letters/ letter of
internal control
 Internal audit reports
 The appointment, removal and
terms of remuneration of the
chief internal auditor

22. 3. SUBSIDARY COMPANIES
 At least one independent director on the board of
directors of the holding company shall be a director on
the board of directors of a material non listed Indian
subsidiary company.
 Review the financial statements
 The minutes of the board meetings of the unlisted
subsidiary company shall be placed at the board
meeting of the listed company

23. 4. DISCLOSURE
 Basis Of Related Party Transactions
 Disclosure Of Accounting Treatment
 Board Disclosures – Risk Management
 Procedures From Public Issues, Right Issues, Preferential
Issues Etc.
 Remuneration Of Directors
 Management
 Shareholders

24. 5. CERTIFICATION
CEO/ CFO shall certify to the board that:
 They have reviewed financial statements and the cash
flow statement for the year
 There are no fraudulent, illegal or volatile transactions.
 They have evaluated the effectiveness of internal
control systems of the company pertaining to financial
reporting
 They have indicated to the auditors and the audit
committee about significant changes in internal
control, in accounting policies and Instances of
significant fraud

25. 6. REPORT ON CG
 separate section on corporate governance in the
annual reports of company
 companies shall submit a quarterly compliance report
to the stock exchanges within 15 days from the close of
quarter

26. 7. COMPLIANCE
 The company shall obtain a certificate from either the
auditors or practicing company secretaries
 The non- mandatory requirements may be
implemented as per the discretion of the company.