The document outlines best practices for corporate governance, including: 1. The board should include a balance of executive and non-executive directors to avoid any one group dominating decisions. Directors should receive regular training. 2. The roles of chairman and CEO should be clearly divided. Remuneration should motivate directors and be linked to performance. 3. An audit committee with at least three independent directors should oversee financial reporting, auditors, and disclosure of share trading. 4. The board should respect shareholder rights and facilitate effective exercise of those rights.

1. Code of Corporate Governance (Cont’d)
For CFO, Head of Internal Audit and company secretary
 Company should appoint them
 BOD should define their roles, responsibilities and duties
 CFO and Company secretary should attend BOD meetings
For Audit Committee
 A Company should have an audit committee as a subcommittee of BOD
 Audit committee should ensure that Financial statement should reflect true & fair view of the
state of affairs of the company and ensure a good monitoring system
 At least 3 members
 BOD should appoint members of the Audit Committee who should be directors of the
company with at least one independent director
 BOD should fill up any vacancy of the committee within one month
 BOD should select one member of the committee to be chairman to the committee
 Audit committee should report to the BOD on the following
1. Report on conflicts of interest
2. Suspected fraud or irregularity or material defect in the internal control system
3. Suspected breach of laws
4. Any other matter which should be disclosed to the BOD immediately
 If the committee’s recommendation for rectification of any matter has been unreasonably
ignored, Audit committee should report such finding to the SEC, upon reporting such matter to
BOD for three times or completion of 9 months from 1st
reporting to BOD, whichever is earlier
For External/ Statutory Auditor
The company should not engaged its external /statutory auditors to perform the following service
 Appraisal or valuation services
 Financial information system design or implementation
 Book keeping or other service relating to accounting
 Broker-dealer services
 Actuarial services
 Internal Audit services
 Any other service that Audit committee determines
Best practices in corporate governance
SAFA has adopted Best practice on corporate governance on September 2005. Its main principles:
Directors Remuneration Accountability/audit Relations with
shareholders
Effective composition of BOD
Responsibility of Chairman of
BOD and CEO
Professional development of
Board
Performance evaluation of the
Board
Level & component of
director’s remuneration
Policy development for
director’s remuneration
Audit committee &
auditors
Disclosure of share
trading
Financial reporting &
Annual Report
Rights of
shareholders
A. Directors
1. Effective composition of BOD: The board should include a balance of executive and
non-executive directors such that none can dominate the Board’s decision taking
2. Responsibility of Chairman of BOD and CEO: Board shall lay down the clear division
of responsibilities of Chairman of BOD and CEO.
3. Professional development of Board: All the director should receive induction training
upon joining and successive training to regularly update
4. Performance Evaluation: Board should establish the process of performance
evaluation.
B. Remuneration
1. Remuneration Level: Remuneration should be sufficient to motivate director and a
reasonable amount of remuneration should be linked to corporate & individual
performance
2. Policy development for director’s remuneration-by nomination committee

2. C. Accountability / Audit:
1. Financial reporting & Control:
2. Audit committee & auditor
3. Timely disclosure of share trading by key personnel
D. Board should respect the rights of shareholders and facilitate effective exercise of the right
The board should include a balance of executive and non-executive directors such that none can
dominate the Board’s decision taking
Internal control:
Internal control is a process designed to provide reasonable assurance regarding the achievement of
organisation’s objective via
 Effective and efficient operations
 Reliable financial reporting
 Compliance with applicable laws and regulations
An internal control system should facilitates a company in the following
 Operate effectively and efficiently
 Respond appropriately to risks
 Safeguard assets from inappropriate use
 Ensure liabilities are identified and managed
 Ensure the quality of internal and external reporting
 Ensure compliance with applicable laws and regulations and internal policies
Responsible person for internal control
BOD – for policy making, reviewing and reporting on internal control
Management – for implementation and day-to-day monitoring of internal control
A sound internal control reduces but not eliminates the possibilities of:
 Poor judgment in decision making
 Human error
 Deliberate circumvention of control processes by employees and others
 Management overriding controls
 Occurrence of unforeseen circumstances
The system of internal control should:
 Be embedded in the operation of the company and form part of its culture
 Be capable of responding quickly to evolving risk
 Include procedures for reporting any significant control failing or weaknesses
Disclosures in the Board’s narrative statement of internal control:
1. It acknowledge responsibility for internal control system and for reviewing its effectiveness
2. The system is designed to manage rather than eliminate the risk of failure
3. The system can only provide reasonable, not absolute, assurance against material
misstatement or loss
4. An ongoing process is in place for identifying, evaluation and managing significant risks
5. The process has been in place for the year and up to the date of annual report and accounts
6. The process is regularly reviewed by the board
7. There is a process to deal with the internal control aspects of any significant problems
disclosed in the annual report and accounts.